Proposed FAA Regulations on Security
Profiling

[Federal Register: April 19, 1999 (Volume 64, Number 74)]
[Proposed Rules]
[Page 19219-19240]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ap99-26]
[[Page 19219]]
_______________________________________________________________________
Part II
Department of Transportation
_______________________________________________________________________
Federal Aviation Administration
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14 CFR Part 108
Security of Checked Baggage on Flights Within the United States;
Proposed Rule
[[Page 19220]]
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 108
[Docket No. FAA-1999-5536; Notice No. 99-05]
RIN 2120-AG51
Security of Checked Baggage on Flights Within the United States
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking (NPRM).
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SUMMARY: The FAA is proposing that each certificate holder required
under Sec. 108.5 to adopt and implement an FAA-approved security
program screen checked baggage or conduct passenger-to-bag matching for
scheduled passenger operations within the United States when using an
airplane having a passenger seating configuration of more than 60
seats. The security of checked baggage on domestic flights may be
accomplished by screening the checked baggage of every passenger with
FAA-certified explosives detection system (EDS) equipment, by 100%
positive passenger bag matching (PPBM), or by utilizing the FAA-
approved computer-assisted passenger screening (CAPS) system to select
passengers whose checked baggage must be subjected to additional
security measures. The checked baggage of CAPS selectees would be
screened by EDS equipment, where available, or bag matching would be
applied. These requirements for checked baggage on domestic flights are
intended to prevent or deter the introduction of explosives or
incendiary devices into the cargo holds of airplanes on flights within
the United States. This proposal is necessary to provide a high level
of security for domestic civil aviation.
DATES: Comments must be received on or before June 18, 1999.
ADDRESSES: Comments on this proposed rulemaking should be mailed or
delivered, in duplicate, to: U.S. Department of Transportation Dockets,
Docket No. FAA-1999-5336; 400 Seventh St., SW, Rm. Plaza 401,
Washington, DC 20590. Comments may also be sent electronically to the
following internet address: 9-NPRM-CMTS@faa.gov. Comments may be filed
and/or examined in Room Plaza 401 between 10 a.m. and 5 p.m. weekdays,
except federal holidays.
FOR FURTHER INFORMATION CONTACT: Mr. Lon M. Siro, Aviation Security
Specialist, Civil Aviation Security Office of Policy and Planning, ACP-
100, Federal Aviation Administration, 800 Independence Avenue, SW.,
Washington, DC 20591; telephone (202) 267-3414.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments, as
they may desire. Comments relating to the environmental, energy,
federalism, or economic impact that might result from adopting the
proposals in this notice are also invited. Substantive comments should
be accompanied by cost estimates. Comments must identify the regulatory
docket or notice number and be submitted in duplicate to the Rules
Docket address specified above.
All comments received, as well as a report summarizing each
substantive public contact with FAA personnel on this rulemaking, will
be filed in the docket. The docket is available for public inspection
before and after the comment closing date.
All comments received on or before the closing date will be
considered by the Administrator before taking action on this proposed
rulemaking. Late-filed comments will be considered to the extent
practicable. The proposals contained in this notice may be changed in
light of the comments received.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must include a pre-addressed,
stamped postcard with those comments on which the following statement
is made ``Comments to Docket No. FAA-1999-5336.'' The postcard will be
dated, stamped, and mailed to the commenter.
Availability of NPRM's
An electronic copy of this document may be downloaded using a modem
and suitable communications software from the FAA regulations section
of the Fedworld electronic bulletin board service (telephone: 703-321-
3339), the Federal Register's electronic bulletin board service
(telephone: (202) 512-1661), or the FAA's Aviation Rulemaking Advisory
Committee Bulletin Board service (telephone: (800) FAA-ARAC or (202)
267-5948).
Internet users may reach the FAA's web page at http://www.faa.gov/
avr/arm/nprm/nprm.htm or the Federal Register's webpage at http://
www.access.gpo.gov/su__docs/aces/aces140.html for access to recently
published rulemaking documents.
Any person may obtain a copy of this NPRM by submitting a request
to the Federal Aviation Administration, Office of Rulemaking, ARM-1,
800 Independence Avenue, SW., Washington, DC 20591, or by calling (202)
267-9680. Communications must identify the notice number or docket
number of this NPRM.
Persons interested in being placed on the mailing list for future
NPRM's should request from the above office a copy of Advisory Circular
No. 11-2A, Notice of Proposed Rulemaking Distribution System, that
describes the application procedure.
Background
Over the past several years, the Federal Aviation Administration
(FAA) has recognized that the threat against civil aviation has changed
and grown. In particular, recent terrorist activities within the United
States have forced the FAA and other federal agencies to reevaluate
their assessment of the threat against civil aviation. For example,
investigations into the February 1993 attack on the World Trade Center
uncovered a foreign terrorist threat in the United States more serious
than previously known. In addition, in 1995 a conspiracy was discovered
involving Ramzi Ahmed Yousef and co-conspirators who intended to bomb
twelve American airliners over the Pacific Ocean. This conspiracy
showed that: (1) foreign terrorists conducting future attacks in the
United States may choose civil aviation as a target, despite the many
more easily accessible targets equally symbolic of America; (2) foreign
terrorists have the ability to operate in the United States; and (3)
foreign terrorists are capable of building and artfully concealing
improvised explosive devices that pose a serious challenge to aviation
security. In addition to threats posed by foreign terrorists, criminals
operating within the United States also pose a threat. For example, the
partial detonation of a bomb aboard American Airlines flight 444 while
en route from Chicago to Washington, DC, in 1979, has been attributed
to Theodore Kaczynski (known as ``the Unabomber'').
The serious consequences of an in-flight explosion were
dramatically demonstrated on July 17, 1996, when Trans World Airlines
(TWA) flight 800 crashed off the coast of Long Island, New York. While
the Federal Bureau of Investigation (FBI) and the National
Transportation Safety Board (NTSB) determined that this accident was
not the result of a terrorist act, it did elevate concerns regarding
the safety and security of civil aviation. This concern led to the
formation of the White House
[[Page 19221]]
Commission on Aviation Safety and Security (the Commission).
The Commission made several recommendations that were published on
February 12, 1997, in its ``Final Report to President Clinton.'' In
reviewing civil aviation security, the Commission stated that ``the
threat of terrorism is changing * * * it is no longer just an overseas
threat from foreign terrorists. People and places in the United States
have joined the list of targets, and Americans have joined the ranks of
terrorists.'' The Commission indicated that aviation security would be
enhanced by the use of sophisticated technology for determining the
presence of explosives in checked baggage, such as use of explosives
detection system (EDS) equipment. The Commission recommended that,
until those machines are widely available, the FAA should implement bag
matching, initially based on passenger profiling, by December 31, 1997,
and that the FAA should develop an automated system for passenger
profiling. (For the purposes of the discussion of the CAPS system in
this NPRM, the terms ``passenger profiling'' and ``passenger
screening'' are used interchangeably.) Because of the FAA's high degree
of confidence in CAPS' ability to evaluate information from passenger
name records and other passenger records already maintained by air
carriers, as well as its confidence in CAPS' ability to identify the
large majority of passengers who are not associated with a threat to a
flight, the FAA concurs with the Commission's recommendations. In
addition, due to the limited availability of EDS equipment and the
significant operational and economic impacts that immediate compliance
with the Commission's recommendations would have on the air carriers,
the FAA has determined that a phase-in period is necessary. Security
requirements for implementation of the Commission's recommendations are
discussed below.
White House Commission Recommendations
Explosives Detection System (EDS) Equipment-The FAA defines an EDS
machine as an automated device, or combination of devices, which has
the ability to detect, in passengers' checked baggage, the amounts,
types, and configurations of explosive materials likely to be used by
terrorists to cause catastrophic damage to large aircraft. The term
``automated'' means that the system is able to detect explosive
materials and does not depend exclusively on human skill, vigilance, or
judgment. Because EDS equipment is capable of detecting the explosive
materials used in bombs with minimal human intervention, the FAA has
determined that it is highly effective and agrees with the Commission's
contention that use of EDS equipment is preferable to other security
measures for clearing checked baggage, including PPBM. The FAA and the
Commission also agree that full deployment of EDS is not something that
is operationally feasible in the near future, due to the limited
availability of certified EDS equipment. Accordingly, the FAA believes
use of EDS equipment should be phased in to eventually replace PPBM and
other checked baggage security measures. For a further discussion of
this alternative and others, see discussion under ``Alternatives
Considered by the FAA'' below.
Bag Matching, Initially Based on Passenger Profiling--The
Commission recommended that, until sophisticated technology for
determining the presence of explosives in checked baggage is widely
available, the FAA begin implementation of baggage matching, initially
based on passenger profiling (discussed below), for domestic flights.
The Commission stated, ``this approach is the most effective
methodology available now.'' Positive passenger baggage matching
involves matching the passengers who have boarded the airplane to the
baggage that was checked for carriage in the airplane's baggage
compartment so that a passenger's checked baggage is flown only if he
or she is aboard that airplane. Although 100% PPBM is currently
performed on all international flights, pursuant to the International
Civil Aviation Organization (ICAO) requirements, the FAA has not
required PPBM on domestic flights except in periodic emergency
situations. While civil U.S. flag aircraft have long been an attractive
target of terrorists overseas, bombings of airliners within the United
States have been extremely rare, even though the U.S. civil aviation
system is the largest and most complex in the world. Over 500 million
passengers (40 percent of all passengers in the world) enplane at U.S.
airports and check approximately 750 million bags. In addition, 14 of
the world's 20 busiest airports are in the United States.
As stated above, the FAA recognizes the changing threat to civil
domestic aviation and believes that, in lieu of screening by EDS
equipment, checked baggage must be properly matched to passengers on
domestic flights. The FAA, however, also recognizes that, while ICAO
standards may be appropriate for international flights, there are
significant differences between domestic and international flights due
to the varying levels of threat to them and the economic impact of
additional security measures. These differences include: (1) the much
greater number of domestic flights; (2) the use of an extensive and
highly concentrated ``hub and spoke'' system, in which flights converge
on a central connection point, and scheduled connection times may be 25
minutes or less; (3) the significantly earlier check-in time for
international flights, which allows PPBM reconciliation delays to be
kept to a minimum; and (4) the higher rate of last-minute passenger no-
shows and cancellations on domestic flights, which could result in a
greater number of passenger reconciliation and baggage-pull delays.
Automated Passenger Profiling--The Commission's recommendation that
bag matching be implemented was linked to another recommendation that
it be initially based on profiling of passengers flying out of airports
located in the United States. As with manual profiling, the purpose of
automated profiling is to exclude from the additional security measures
the great majority of passengers who are very unlikely to present any
threat and, conversely, to identify passengers to whom heightened
security measures should be applied. Unlike manual profiling, however,
automated profiling offers numerous advantages, including elimination
of the potential perception of personal biases, greater sophistication,
speed, accuracy, flexibility, and protection against compromise of
sensitive security information. The Commission discussed a computer-
assisted passenger screening (CAPS) system developed by the FAA and
Northwest Airlines and recommended that the FAA implement an automated
profiling system by December 31, 1997. On January 1, 1998, several air
carriers voluntarily implemented CAPS, and most other carriers have
since opted to implement it as well. The few carriers that have yet to
complete the phase-in of CAPS are in the process of systemwide
implementation.
In April 1997, in accordance with provisions of an FAA grant, the
FAA and Northwest Airlines completed final programming changes to a
prototype CAPS system, which, as noted above, Northwest Airlines and
most other carriers have since implemented. The CAPS system was
developed as a more feasible alternative to 100% checked baggage
matching and EDS screening of all passenger baggage by narrowing the
pool of passengers on whom additional security measures should be
focused, thus effectively utilizing the currently limited supply of
highly technical
[[Page 19222]]
screening equipment (e.g. EDS), and minimizing the operational impact
of applying other passenger and checked baggage security measures, such
as PPBM.
The CAPS system is based on the same concept as the manual
screening system, which is designed to exclude from additional security
measures the great majority of passengers who are unlikely to present
any threat. There are many advantages to CAPS, however. One important
advantage is that it does not rely on the judgment of individual
airline employees to reduce the population of persons to whom
heightened security measures should be applied. The automated system
``scores'' passengers according to a set of weighted criteria to
determine which should be subjected to additional security measures.
Automated screening excludes from heightened security measures the
great majority of passengers about whom enough is known to determine
confidently that they present no threat.
The use of a profile for the screening of passengers dates back to
the mid-1970's when the FAA began using manual passenger screening to
combat hijackings and to prevent explosives or incendiary devices from
being placed aboard airplanes on international flights departing from
the United States. Manual screening has also been used on domestic
flights during periodic emergency situations. This screening relies on
an employee of an air carrier to determine whether a passenger meets
the profile that the employee has been trained to use. Because manual
screening allows for more extensive human interaction between
passengers and air carrier employees, it carries the potential that,
even though the factors used in conducting manual screening are not
biased, an employee's personal bias can be evident, regardless of
whether a given passenger is a selectee or not. While manual screening
has been a successful tool in combating hijackings and preventing the
introduction of explosives or incendiary devices onto aircraft, it has
been criticized by persons who perceived it as discriminating against
citizens on the basis of race, color, national or ethnic origin,
religion, and gender. It has also been criticized for causing
embarrassment to selectees when fellow passengers became aware of his
or her selectee status. Because a technological substitute for
individual employee judgment has not been available until now, the FAA
has continued to require, in emergency situations, manual passenger
screening for determining the need to implement heightened security
measures for checked baggage in order to combat the placing of
explosives aboard aircraft.
The CAPS system would, in addition to selecting persons pursuant to
the profiling standards, randomly select a limited number of
passengers, as specified in air carriers' FAA-approved security
programs, for heightened security measures. The FAA has determined, and
the Commission has recommended, that random selection, which ensures
that each passenger has a chance of being a selectee, has a deterrent
value that would increase airline passenger security. It means that,
even if an individual with criminal intentions believed he or she had
figured out how to circumvent the CAPS system, the individual still
would have a chance of being designated as a selectee. In addition,
random selection helps to ensure passengers' civil liberties by
guaranteeing that no individual or group of individuals is excluded
from the selection process.
The CAPS system represents a significant improvement over the
existing manual system. It uses a greater number of factors and permits
combinations of sets of factors to determine passengers' status with
greater confidence. In contrast, there are inherent limitations on the
number and complexity of factors that an air carrier employee can
apply. In addition, air carrier employees performing the manual process
have a limited amount of time available to assess the factors and
determine whether a passenger is a selectee. For these reasons, the
number of factors in a manual process must be small and the rules for
applying them must be simple. The CAPS system virtually eliminates the
possibility of subjective selection and inadvertent or deliberate
discrimination by airline employees, as they would not be asked to
implement any selection process themselves. Finally, the CAPS system
provides a more secure system, as only a few key airline employees
(i.e., those who program the computers and implement computer program
changes) are provided with selection criteria and their relative
weights. Other air carrier employees need only be aware of the output
generated by the computer programs, without being aware of the
criteria. Manual screening, though controlled, may be more easily
compromised, as details are contained in FAA Security Directives, which
are available to many airline employees.
The CAPS system is also intended to minimize the overt
identification of passengers selected for additional security
procedures. The CAPS system operates off the computer reservation
systems utilized by the major U.S. air carriers as well as some smaller
carriers. The CAPS system relies solely on information that passengers
presently provide to air carriers for reasons unrelated to security. It
does not depend on the gathering of any additional information from air
travelers, nor is it connected to any law enforcement or intelligence
database. Pursuant to a recommendation by the Department of Justice, as
part of the proposed rule, the FAA would periodically review the CAPS
system and its profiling factors to assure that they continue to be
reasonable predictors of threat. For operations covered under this
proposed rule, CAPS would replace the manual screening system as a
baseline security measure.
Funding for Implementation of White House Commission
Recommendations--The FAA subsidized a substantial portion of the air
carriers' cost for development of the core CAPS system. In addition to
grants of approximately $3.1 million to Northwest Airlines for the
development of the prototype CAPS system, consultation to the FAA, and
technical support to other air carriers, the FAA spent an additional
$7.4 million for the development of core CAPS for other air carriers.
In total, the $10.5 million subsidy has benefited eight lead carriers
(provided to six separate Computer Reservation Systems (CRS)), all
carriers associated with the lead carriers (e.g., feeder carriers),
plus 19 other regional and national carriers. In total, approximately
95% of domestic airline passengers are served by the carriers receiving
FAA subsidies. Also, by the end of fiscal year 1998, the FAA will have
spent $129 million for the purchase, installation, initial training,
and first-year maintenance of advanced security screening equipment
designed to detect explosives in checked baggage. This equipment, which
will be deployed at airports in the United States, includes EDS
machines (54 new and 3 upgrades), advanced technology (AT) equipment
(22 of which are assessed by the FAA as effective), and other high-
technology equipment such as explosives trace detection technologies
used to assist in alarm resolution for EDS and AT equipment. The FAA
intends, subject to Congressional approval, to purchase an additional
20 EDS machines during fiscal year 1998 for $25.1 million, and has
requested additional funding of $100 million in fiscal year 1999 to
continue purchases of advanced security equipment to be installed at
U.S. airports. The FAA intends to
[[Page 19223]]
request appropriations at similar levels in fiscal years 2000 and
later.
Alternatives Considered by the FAA
In developing this proposed rule, the FAA considered the relative
merits and disadvantages of the following alternatives:
(1) Maintaining the current policy for security of checked baggage
on domestic flights. To date, the FAA has required domestic checked
baggage screening and PPBM only when a heightened threat exists.
Domestic baseline security measures under normal conditions, though not
requiring checked baggage screening and PPBM, have thus far been
adequate to counter the domestic threat. However, as evidenced by
events such as the World Trade Center bombing, the FAA believes that
the threat to civil aviation within the United States has increased and
further rulemaking is vital. Though maintaining current baseline
security measures would be the least costly course of action, the FAA
does not believe this option is prudent given the current domestic
threat.
(2) Phasing in mandatory use of EDS (without requirement for CAPS).
The FAA considered requiring carriers to use EDS as it becomes
available to them for screening 100% of checked baggage, and not
requiring CAPS for those that would be using EDS. EDS offers the
highest level of security because it is an automated system. To be
certified, the system must have the ability to detect in passengers'
checked baggage, the amounts, types, and configurations of explosive
materials likely to cause catastrophic damage to an aircraft. The term
``automated'' means that the ability of an EDS to detect explosive
materials does not depend on human skill, vigilance, or judgment.
Baggage that clears through EDS screening does not require additional
security measures on subsequent flight segments. In keeping with the
White House Commission's recommendations, it is the FAA's goal to phase
in EDS for all flights that would be subject to this proposed rule,
which would make continued use of the CAPS system unnecessary in the
future; however, because of the limited availability of EDS equipment,
this goal of all carriers using EDS for 100% of its flights cannot be
implemented in the near future. Under the alternative scenario of
requiring carriers that have EDS to use it and not use CAPS, carriers
that do not have EDS would not be required to do anything beyond what
they are currently required to do (manual profiling or PPBM during
heightened threats) until they are provided with EDS equipment. While
the FAA recognizes that this would be a less costly approach for the
carriers waiting to acquire EDS equipment, it could provide an unfair
competitive advantage to those carriers that have not been provided EDS
because of the additional costs associated with maintaining and
staffing the equipment. Also, there would be little improvement in the
level of security during the early phase-in period when few terminal
gates have any EDS equipment. Moreover, overall aviation security may
be reduced during the early phase-in period because a terrorist could
more easily figure out which carriers were using EDS and which were
not.
(3) Requiring 100% PPBM of each carrier while phasing in mandatory
use of EDS. Although 100% PPBM is required for international flights,
the FAA has determined that this approach is not feasible for domestic
flights, even though it may be an effective alternative while EDS is
being phased in, because it would be too costly. Domestic flights
differ from international flights from the United States in the
following respects: (1) There are a greater number of domestic flights;
(2) they are coordinated around a hub and spoke system; (3) passengers
can check in as late as 10 minutes prior to a flight; and (4) there is
a significant rate of last-minute passenger cancellations and no-shows.
The FAA believes that the passenger would ultimately feel the negative
impact of 100% PPBM because the availability and affordability of air
transportation would be affected. The FAA's studies show that air
carriers would lose on average one rotation per aircraft in service per
day. The loss of flights would be due to longer time needed to load the
baggage for each flight and cumulative delays when problems loading one
flight impact on connecting flights. These operational burdens on air
carriers would result in passengers paying more for tickets and getting
fewer discount offers. While the FAA recognizes that this approach
would also provide a high level of security, it does not believe that
the significant operational and economic costs associated with 100%
PPBM are justified. The FAA also does not consider performing 100% PPBM
a good allocation of air carrier resources, as the vast majority of
passengers who would be subjected to it would not pose a threat. In
addition, since it is the FAA's goal to require the use of EDS
equipment for all flights in the next 10 years, conducting 100% PPBM,
which is not as effective as screening by EDS, would ultimately be
phased out.
(4) Bag matching on randomly selected passengers while phasing in
EDS. While this alternative could be more effective than continuing to
rely on manual profiling, which still has value as a security measure
even though its effectiveness has eroded, the FAA does not believe it
would be practical. Deciding how small or large a percentage to require
would be difficult. Screening too small a percentage of passengers
would not provide an adequate level of security, and screening too
large a percentage would result in the same kinds of inconveniences and
delays described above under ``Requiring 100% PPBM of each carrier
while phasing in mandatory use of EDS.'' Even though the proposed rule
would require that air carriers use an approved CAPS system that would
be programmed to select some passengers at random, both as a deterrent
and to ensure the nondiscriminatory application of CAPS, the use of an
exclusively random selection process, even if it were done by computer
and not manually, would not be a satisfactory security measure. The FAA
therefore does not believe that it would be a good allocation of an air
carrier's resources to conduct bag matching or EDS screening on the
checked baggage of selectees chosen purely at random, as the vast
majority of those selectees would not have posed any risk.
(5) Bag matching on passengers selected by CAPS with use of EDS,
where available (the proposed rule). Until it is possible for air
carriers to acquire and use EDS equipment for screening checked baggage
on all scheduled operations subject to this rule, at which time the use
of CAPS and PPBM would be replaced, the FAA believes that using CAPS to
identify those passengers who possibly are a threat to the security of
a flight and requiring bag matching or screening by EDS, when
available, is the most practical and cost-efficient alternative
currently available to increase the level of security on domestic
flights. Using CAPS would enable air carriers to use already-existing
data from reservations systems, eliminate the civil liberties concerns
associated with manual passenger screening methods, and eliminate from
consideration the majority of passengers who do not pose a threat to
civil aviation. By limiting the pool of selectees to those who meet
certain risk criteria, as opposed to those who are chosen randomly and
most likely would not pose a threat, and subjecting only the checked
baggage belonging to those selectees to bag matching, the air carriers
would realize greater cost benefits than using the random method to
identify selectees. While identifying selectees randomly or
[[Page 19224]]
by using CAPS would result in approximately the same cost to an air
carrier, using the CAPS criteria would allow the carrier to concentrate
its resources on clearing the baggage of passengers about whom there is
insufficient information to confidently conclude that they pose no
threat. For these reasons, the FAA has chosen this alternative as the
basis for today's proposed rule.
(6) Performing bag matching on a limited number of CAPS selectees.
This would be a modification of the proposed rule in that air carriers
would use the CAPS system to determine a pool of selectees, but perform
bag matching on only a portion of them. This would reduce the cost of
implementing the regulations by keeping the pool of selectees as small
as possible. However, this approach would offer a lower level of
security and would essentially amount to reducing the value of the CAPS
criteria.
For more detailed cost analyses of these alternatives, see the
``Regulatory Evaluation Summary'' below.
Discussion of the Proposed Rule
This proposal, if adopted, would amend part 108 (14 CFR part 108)
to require each certificate holder required under Sec. 108.5 to adopt
and implement an FAA-approved security program to employ one of the
following options--(1) use an FAA-approved CAPS system for each
originating passenger checking baggage, then either use FAA-certified
EDS equipment, where available, to screen the checked baggage of the
CAPS selectee or conduct bag matching to ensure that the checked
baggage of the CAPS selectee is not transported aboard an airplane
unless that selectee is aboard the same airplane and flight; or (2)
where CAPS is not used, conduct 100% EDS screening on checked baggage
or 100% PPBM. This requirement would only be imposed on certificate
holders that engage in operations with airplanes having a passenger
seating configuration of more than 60 seats. Certificate holders that
are engaged in operations with an airplane having a passenger seating
configuration of 60 or fewer seats may choose to comply with this
requirement, but they must adopt and implement an FAA-approved security
program to do so.
Under the FAA-approved CAPS system, the checked baggage of the
small percentage of passengers whom the CAPS system has identified as
selectees would be subjected to screening by EDS or bag matching
procedures would be applied. To further enhance the deterrence value of
the system, the CAPS system would be required to also randomly select a
small percentage of other passengers (the percentages to be specified
in each air carrier's standard security program) whose checked baggage
would be subjected to the same types of additional security measures as
that of the other CAPS selectees. These additional security measures
would include EDS, where available, or bag matching. The Department of
Justice has reviewed the FAA's proposed CAPS system and found there to
be no infringements on civil liberties (see discussion of ``Civil
Liberties Issues'' below). For a more in-depth analysis of proposed
rule, see discussion under ``Section-by-Section Analysis'' below.
Civil Liberties Issues
The Commission, while endorsing CAPS, recognized that care must be
taken in implementing automated passenger profiling to ensure that
there would be no infringements on the civil liberties of American
citizens. Accordingly, the Commission convened a panel of civil
liberties experts from outside the government to provide guidance.
Based on the proposals made by this panel, the Commission made several
recommendations, including that the Department of Justice (in
consultation with other experts) review the FAA's proposed CAPS system
prior to implementation ``to ensure that selection is not impermissibly
based on national origin, racial, ethnic, religious, or gender
characteristics.''
On October 1, 1997, following its review, the Department of Justice
issued the ``Report by the Department of Justice to the Department of
Transportation on the Department's Civil Rights Review Conducted of the
Federal Aviation Administration's Proposed Automated Passenger
Screening System.'' In its report, the Department of Justice stated
that its principal finding is that the FAA's proposed CAPS system will
not discriminate on the basis of race, color, national or ethnic
origin, religion, or gender. The Department of Justice went on to state
the following:
<bullet> CAPS fully complies with the equal protection guarantee
incorporated in the Fifth Amendment to the Constitution. CAPS will
not impermissibly select passengers for heightened security measures
on the basis of race, color, national or ethnic origin, religion, or
gender.
<bullet> CAPS does not violate the Fourth Amendment prohibition
on unreasonable searches and seizures. CAPS itself involves no
``search'' or ``seizure;'' nor does bag matching, pursuant to CAPS,
occasion any ``search'' or ``seizure.'' A search of a selectee's
luggage pursuant to CAPS, such as by an EDS screening, is a
permissible extension of the constitutional administrative search
procedures that operate at U.S. airports today.
<bullet> CAPS does not involve any invasion of passengers'
personal privacy. CAPS does not create any new database on
passengers and is not linked to any database other than the existing
airline computer reservation systems. CAPS selectee results will not
be retained on a personally identifiable basis and the information
used to calculate each CAPS result will not be retained on computer
by the airline reservation systems.
In its report, the Department of Justice recommended that the
Department of Transportation, with the Department of Justice, take five
steps to further assure that airline passenger screening is implemented
in a non-discriminatory and appropriate manner. The five
recommendations are as follows:
1. The FAA should undertake regular, periodic reviews of CAPS (and
any residual manual screening system) to ensure that the screening
factors continue to be reasonable predictors of risk or the absence of
risk;
2. The Department of Justice, with the assistance of the Office of
the Secretary of Transportation and the FAA, should undertake a post-
implementation review of CAPS (and any residual manual system),
approximately one year after implementation begins, to ensure that
selection in fact is not impermissibly being based on race, color,
national or ethnic origin, religion, or gender, and should undertake
additional reviews thereafter as appropriate;
3. The Office of the Secretary of Transportation and the FAA should
expand their public education and outreach efforts to inform the
American public about the purpose of airline passenger screening, as
well as the right of passengers to file a complaint * * * if they
believe they were the victim of discriminatory airline security
procedures;
4. The FAA should require that domestic air carriers that implement
CAPS (or any residual manual system) obtain pre-approval from the FAA
before implementing any passenger screening system in addition to the
screening procedures prescribed by the FAA, and the FAA should consult
with the Department of Justice before approving any supplemental
screening procedure; and
5. The FAA should require that air carriers implementing CAPS (or
any residual manual system) establish procedures to ensure appropriate
interactions between air carrier employees responsible for implementing
passenger screening and airline passengers, and should provide
appropriate training to these employees.
In conclusion, the Department of Justice report stated that the
FAA's
[[Page 19225]]
proposed automated airline passenger screening system, as designed,
would not infringe the civil rights or civil liberties of American
citizens. In addition, the Department of Justice stated that the FAA
has taken great care in designing CAPS so as to respect Americans'
civil rights and civil liberties.
Finally, the Department of Justice stated that it would closely
monitor the FAA's passenger screening procedures to ensure that they
remain non-discriminatory.
Section-by-Section Analysis
Section 108.5 Security Program: Adoption and Implementation
This proposal would amend Sec. 108.5 by requiring all holders of
air carrier operating certificates, or holders of operating
certificates for scheduled passenger operations, that engage in
operations with an airplane having a passenger seating configuration of
more than 60 seats, to comply with the provisions of proposed paragraph
(a) of Sec. 108.12 Security of checked baggage for operations within
the United States. The proposal also allows other operators, where they
operate under an FAA-approved security program, to comply with the
provisions of Sec. 108.12. Section 108.12, as more fully discussed
below, would require the implementation of security measures for
checked baggage on domestic flights by screening the checked baggage of
every passenger with an FAA-certified EDS machine, by conducting 100%
PPBM, or by utilizing an FAA-approved CAPS system for screening airline
passengers and subjecting the selectees' checked baggage to screening
by EDS equipment, where available, or bag matching.
While FAA-approved air carrier security programs, which implement
Sec. 108.9, require checkpoint security measures for the screening of
passengers and their carry-on baggage to prevent or deter the
introduction of deadly or dangerous weapons or incendiary devices
carried aboard an aircraft by a passenger, the security programs
prescribe limited measures to prevent the introduction of improvised
explosive devices in checked baggage on flights within the United
States, except in emergency situations. The FAA recognizes the
potential danger associated with an increase in terrorism in the United
States and the limited baseline domestic checked baggage security
requirements to prevent or deter the introduction of explosives in
checked baggage. This proposal addresses security measures for checked
baggage.
Under this proposal, the FAA would require compliance with
Sec. 108.12 for all air carrier operations using aircraft with more
than 60 passenger seats because the FAA has concluded that larger
aircraft are at a significantly higher risk to terrorist attacks. Since
air carriers with operations using aircraft with passenger seating
configurations of 60 or fewer seats may also wish to comply with the
provisions of Sec. 108.12, the FAA has provided that as an option under
this proposal. These operators would be required to adopt and implement
a security program that includes provisions effecting compliance with
Sec. 108.12. Compliance with an FAA-approved security program would be
required because the FAA believes that any carrier, regardless of the
size of operation, that accepts the responsibility for conducting the
important security measures for checked baggage on operations within
the United States should also be accountable for other aspects of a
security program related to the acceptance and control of checked
baggage. For example, smaller operators with large interline partners,
which use the same passenger reservation services, may decide to comply
with Sec. 108.12. This would include, but would not be limited to,
ensuring that no unauthorized person has access to checked baggage once
it has been subjected to security measures.
Section 108.7 Security Program: Form, Content, and Availability
This proposal would amend
Sec. 108.7 (b) to require that each air carrier's FAA-approved security
program include a description of the procedures used to perform the
checked baggage security functions specified in Sec. 108.12 for
scheduled passenger operations. This amendment is needed to ensure that
each air carrier that adopts and implements an FAA-approved security
program in accordance with Sec. 108.5 would include the provisions for
the security of checked baggage on flights within the United States.
Section 108.12 Security of Checked Baggage for Operations Within the
United States
The FAA is proposing to amend part 108 by introducing a new section
to address the security of checked baggage on flights within the United
States. Under proposed Sec. 108.12 (a), each air carrier required to
adopt and implement a security program under Sec. 108.5, would be
required to apply the checked baggage security requirements of this
section for scheduled passenger operations, in accordance with its
security program, for flights within the United States. For each flight
the air carrier would be required--(1) to apply a CAPS system approved
by the Administrator for each originating passenger checking baggage;
(2) to determine that the passenger associated with each originating
checked bag is aboard the flight; or (3) that each originating bag not
matched to a passenger aboard the flight has been screened by an FAA-
certified EDS machine. To receive approval from the FAA, an air
carrier's CAPS system would have to be capable of selecting passengers
according to specific criteria (which had been assigned relative
weights by the FAA) and at random, as provided in the air carrier's
FAA-approved security program.
When compared to the screening of all checked baggage on flights
within the United States by FAA-certified EDS equipment, or conducting
100% PPBM, the proposed rule would result in a much smaller percentage
of passengers being subjected to additional security measures; however,
the FAA believes at this time that performing 100% PPBM for operations
within the United States is not an efficient use of air carrier
resources because the majority of passengers who would be subjected to
it would not pose a threat. In addition, implementation of 100%
domestic PPBM would be impractical given the operational impact it
would have. The FAA recognizes that 100% screening of all checked
baggage on domestic flights by an FAA-certified EDS machine is not
feasible in the near term, due to the limited availability of EDS
equipment. The FAA views 100% screening or matching of checked bags on
domestic flights as a reasonable long-term goal, but has determined
that screening or matching based on CAPS will greatly strengthen the
security of checked bags on domestic flights in the near term. Further,
CAPS-based measures can be implemented without the time air carriers
would need to attempt the 100% EDS screening or bag matching measures.
Accordingly, this proposed rule would permit options for an air carrier
to either subject all passengers to the FAA-approved CAPS system (with
EDS screening of selectees' checked baggage or matching of selectees
and their checked baggage), employ 100% checked baggage screening by
EDS, or conduct 100% PPBM of passengers and their checked baggage for
operations within the United States. The FAA has concluded, as did the
Commission, that this proposal would provide the most effective
methodology currently available for ensuring the security of checked
baggage on domestic flights.
[[Page 19226]]
Proposed Sec. 108.12 (b) would require that for each operation
subject to proposed Sec. 108.12 (a), the air carrier may not transport
the checked baggage of a non-originating passenger, on-line or inter-
line, unless: (1) the passenger is transported on the same airplane and
flight; (2) the passenger associated with the checked baggage was
screened by an FAA-approved CAPS system prior to an earlier flight or
leg and information is available to the air carrier that the passenger
was not selected for additional security measures; (3) information is
available to the air carrier that the baggage was screened by an FAA-
certified EDS machine prior to an earlier flight or leg; (4) the
baggage is screened by an EDS machine prior to the current flight; or
(5) the passenger is screened by an FAA-approved CAPS system for the
current flight and, if selected, subjected to additional security
measures (checked baggage screening by EDS or bag matching). The
intended purpose of this proposed paragraph is to ensure that checked
baggage on domestic flights would be adequately screened or matched
regardless of where the baggage originated. For example, an air carrier
may receive a non-originating inter-line transfer passenger whose
checked baggage may not have been subjected to any screening
requirements. This proposal would ensure that the non-originating
inter-line transfer passenger's checked baggage would undergo checked
baggage security requirements before being placed in the cargo
compartment of the airplane. The FAA has determined that this proposed
requirement is necessary to prevent explosive devices concealed in
checked baggage transferred from earlier flights from being introduced
into the holds of airplanes.
Proposed Sec. 108.12 (c) would require that the checked baggage of
a passenger selected by the CAPS system not be transported aboard the
flight unless it had been screened by an FAA-certified EDS machine,
where available, or had been matched to the selectee. The FAA is
proposing under this paragraph to require the use of available EDS
equipment for the screening of selectee checked baggage because EDS is
highly effective in detecting explosives. To ensure that there is a
consistent and realistic interpretation of when EDS is ``available,''
proposed Sec. 108.12 (d) provides a description of what constitutes EDS
availability. The FAA recognizes that, because of the various factors
that play a role in baggage make-up operations (e.g., the physical lay-
out of an airport's facilities), a definition of ``available'' might be
difficult to apply uniformly in this context. For this reason, the FAA
seeks specific comments on whether the proposed definition of the term
is a reasonable one. The proposed section provides that EDS is
considered to be available to an air carrier for screening checked
baggage when the equipment is--
(1) Under the operational control of the air carrier. The carrier
that has operational control of EDS equipment is generally the air
carrier to which the FAA has provided the equipment. This carrier is
usually responsible for the testing, maintenance, and staffing of the
machine; however, it may be possible for one carrier to share or accept
operational control under a contractual agreement with another air
carrier.
(2) Functioning properly. Carriers with operational control of EDS
equipment are required by their FAA-approved security programs to
conduct daily testing to ensure that the equipment is functioning
properly. Once it is determined, either by carrier testing or by
periodic FAA testing, that the EDS equipment is not performing in
accordance with minimum EDS certification standards, it cannot be used
for the screening of checked baggage until it is repaired or replaced.
(3) Located proximate to where the baggage is tendered by the
passenger or along the route the baggage normally travels during the
process of being loaded onto the aircraft. This is intended to avoid a
situation where an air carrier would be required to use EDS equipment
that is not easily and readily accessible to it, and where using it
would result in significant operational delays. For example, for its
current flight, an air carrier may be authorized to use EDS equipment
which has been installed at a location at the airport that is not at or
near the point of checked baggage acceptance, or in the baggage make-up
area.
(4) Staffed by appropriately trained personnel. Staffing and
training requirements for EDS screeners are described in the air
carrier's FAA-approved security program.
(5) Not in use to screen other identified baggage such that a
significant delay in a flight might result from having to wait to use
the EDS to screen the bag. This description is intended to avoid a
situation where EDS equipment meets all other descriptions for
availability and is performing in accordance with minimum throughput
requirements, but baggage cannot be processed quickly enough to avoid a
significant flight delay. This might occur, for example, when several
flights serviced by the same EDS are leaving at the same time,
resulting in a severe backup of bags waiting to be processed through
the same EDS.
In proposed Sec. 108.12(e), the FAA would require that each air
carrier establish procedures for implementing the screening of checked
baggage under proposed Sec. 108.12. The proposal would also require the
air carrier to ensure nondiscriminatory application, and to reduce to
the extent practicable the overt identification of passengers selected
for additional security procedures.
In proposed Sec. 108.12(f), the FAA would require that each person
used by an air carrier to implement its CAPS system whose job function
will be likely to involve interactions with passengers shall be trained
on the CAPS system. The proposed training would include--(1) an
overview of the purpose of screening, including an explanation that
selection does not imply that a passenger is suspected of any illegal
activity; (2) a general description of the CAPS system and how it is
designed to select passengers on a non-discriminatory basis; (3) an
advisory that the CAPS system selects some passengers at random; (4) an
explanation that the CAPS system is not connected to any law
enforcement or intelligence data base; and (5) instruction on treating
passengers selected by the CAPS system in a respectful and non-
stigmatizing manner. These proposed paragraphs are based on
recommendations from the Department of Justice, as discussed previously
in the ``Civil Liberties Issues'' section. The FAA has determined that
these proposed measures are necessary to implement the Justice
Department's recommendations and to assure that CAPS is implemented in
a non-discriminatory and appropriate manner.
In proposed Sec. 108.12(g), the FAA would require that an air
carrier may not modify the criteria of the CAPS system, or their
weighting, without the written approval of the Administrator. This
proposed paragraph would also provide that an air carrier may not apply
any supplemental system of passenger screening to select passengers for
additional security measures without the approval of the Administrator.
The FAA has determined that this proposal is necessary to ensure that
no impermissible factors are used to select passengers for additional
security measures. This proposal also ensures that there is
standardization among air carriers utilizing an FAA-approved CAPS
system for screening checked baggage (i.e., the same factors are used
in profiling passengers).
[[Page 19227]]
In proposed Sec. 108.12(h), the FAA would require that each air
carrier make available to the Administrator the information specified
in its security program on the operation of its CAPS system; however,
the FAA anticipates that this information would not be routinely
requested. In overseeing compliance with proposed Sec. 108.12, the FAA
would need to know which individuals were actually being selected by
the CAPS system in order to ensure that members of specific ethnic
groups were not being unfairly targeted and that selectee rates did not
vary, for example, between carriers or regions. The FAA believes that
this requirement would be necessary to protect the civil rights and
liberties of individuals selected by the CAPS system. The proposal
would further require that an air carrier dispose of any information
linking a passenger's name or other personal identifying data to
whether that passenger was selected by the CAPS system no sooner than
24 hours, but no later than 72 hours, after a flight's departure. By
specifying data retention for a minimum of 24 hours after a flight
departure, the FAA intends to ensure that it can, when necessary,
obtain information in the course of investigating accidents or security
incidents, overseeing air carrier security programs (i.e., that the
CAPS system has been properly applied and implemented throughout each
step of processing checked baggage), or monitoring the
nondiscriminatory application of the CAPS system. The data retention
limit of 72 hours after a flight departure is intended to ensure that
no long-term database of personally identifiable information is kept.
While the FAA has set forth an all-selectee data retention limit of
72 hours after flight departure as its proposed rule under
Sec. 108.12(h), the Department of Transportation's Office of the
Assistant General Counsel for Aviation Enforcement and Proceedings has
requested that the FAA seek comments on whether information relating to
random selectees should be retained for a more extended period (eg., 18
months) than information on non-random CAPS selectees. The Office of
Aviation Enforcement and Proceedings is the office that investigates
airline security-related discrimination complaints filed with the
Department of Transportation. That office has advised the FAA that,
while it could effectively investigate the application of the non-
random CAPS selection process, it is concerned that there would be no
basis upon which to make determinations regarding the appropriate
application of the random CAPS selection process. The Office of
Aviation Enforcement and Proceedings notes that typically a complaint
is received, and the investigation takes place, three to nine months
after a passenger's flight, and it is not reasonable to expect that the
air carrier employee involved in a particular selection (even if that
employee's identity could be established) would have recollection of
the specific incident being investigated. To determine whether or not
an air carrier employee or the CAPS system made a particular selection,
a record of any random selection would be needed. The Office of
Aviation Enforcement and Proceedings believes that, as long as the only
CAPS selection data retained for an extended period of time concerned
the purely random selections, there would be no infringement on
passengers' privacy rights, while their civil rights would be better
protected. The FAA therefore requests comments (including
implementation and maintenance cost estimates) on the recommendations
of Office of Aviation Enforcement and Proceedings.
Finally, in proposed Sec. 108.12(i), the FAA would require that an
air carrier receive approval from the Associate Administrator for Civil
Aviation Security before it may apply alternate procedures from its
security program for the security of checked baggage in special
situations. As provided under this proposal, these special situations
would include: (1) baggage acceptance at off-airport locations; (2) the
transportation of bags separated from a passenger for reasons outside
the control of the passenger (e.g., lost bags); (3) CAPS system
failures; (4) extraordinary operational circumstances (e.g., natural
disasters or extreme weather conditions); (5) the use of technologies
or equipment other than EDS to screen checked baggage; and (6) any
other situation specified by the Associate Administrator for Civil
Aviation Security in the air carrier's security program. The FAA has
determined that this proposed paragraph is needed to provide relief to
an air carrier for special circumstances and during those extraordinary
and emergency situations where the passenger and air carrier do not
have control over the circumstances.
Paperwork Reduction Act
This NPRM, Security of Checked Baggage on Flights Within the United
States, contains information collection requirements. As required by
the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has
submitted a copy of these proposed sections to the Office of Management
and Budget (OMB) for its review.
The FAA expects that this proposed rule would affect 32 air
carriers, and that the proposed rules under Sec. 108.12 would impose
additional reporting and recordkeeping requirements on those operators.
This reporting and recordkeeping would be needed, when requested by the
Administrator, as part of monitoring for the nondiscriminatory
implementation of CAPS, accident and security incident investigations,
oversight of air carrier SSP compliance, or evaluating personnel
training records. Accordingly, it is estimated that all 32 affected air
carriers would spend a total of 64 hours, in the first year, to provide
compliance information, and 4,981 hours in all years to generate
training information. Hence, there would be a total burden of 5,045
hours in the first year and 4,981 hours in all subsequent years. Over a
ten-year period (2000-2009), the average estimated annual cost would be
$827,678 per affected air carrier (a total of $26,485,695 for all 32
affected carriers). These cost figures are based on estimates provided
in the FAA's ``Regulatory Impact Analysis.''
The FAA does not expect that there would be any additional record
keeping burden on part 108 aircraft operators which either conduct 100%
PPBM or use FAA-certified EDS equipment to screen checked baggage.
Organizations and individuals desiring to submit comments on the
information collection requirements should do so by June 18, 1999.
Comments should be directed to the Department of Transportation's rules
docket (see ADDRESSES above). These comments should reflect whether the
proposed collection is necessary; whether the agency's estimate of the
burden is accurate; how the quality, utility, and clarity of the
information to be collected can be enhanced; and, how the burden of the
collection can be minimized.
International Compatibility
The FAA has determined that a review of the Convention on
International Civil Aviation Standards and Recommended Practices is not
warranted because the proposed rule would apply to domestic operations
only.
Economic Evaluation Summary
This proposed rule is considered a significant regulatory action
under section 3(f) of Executive Order 12866 and, therefore, is subject
to review by the Office of Management and Budget. This proposed rule is
considered significant under the regulatory policies
[[Page 19228]]
and procedures of the Department of Transportation (44 FR 11034;
February 26, 1979).
Proposed and final rule changes to Federal regulations must undergo
several economic analyses. First, Executive Order 12866 directs that
each Federal agency shall propose or adopt a regulation only upon a
reasoned determination that the benefits of the intended regulation
justify its costs. Second, the Regulatory Flexibility Act of 1980, as
amended May 1996, requires agencies to analyze the economic effect of
regulatory changes on small entities. Third, the Office of Management
and Budget directs agencies to assess the effect of regulatory changes
on international trade. In conducting these analyses, the FAA has
determined that the proposed rule would generate benefits that justify
its costs and is ``a significant regulatory action'' as defined in the
Executive Order and the Department of Transportation Regulatory
Policies and Procedures. The proposed rule will have a significant
impact on a substantial number of small entities and will not
constitute a barrier to international trade. In addition, this proposed
rule does contain Federal intergovernmental or private sector mandates.
Therefore, the requirements of Title II of the Unfunded Mandates Reform
Act of 1995 do apply. These analyses, available in the docket, are
summarized below.
A. Costs
Although the proposed rule requires the use of EDS, where
available, for screening the checked baggage of CAPS selectees, the FAA
was unable to develop a cost of compliance due to the lack of
information on how many EDS machines each air carrier would need at
each airport. Since interpretation of ``where available'' may differ
among air carrier operators, it becomes very difficult to estimate the
potential cost of using EDS. As a result of this situation, the FAA
estimated the cost of this proposed rule on the premise that all air
carriers adopting CAPS would use baggage matching as the security
measure. Baggage matching represents a worst case scenario in terms of
costs.
This analysis has estimated the costs of the proposed rule by
examining the incremental changes from the existing air carrier
security regulations rather than from procedures required by emergency,
temporary regulations. On occasion the FAA establishes security
measures on an emergency basis, typically through limited duration
Security Directives, to respond to specific or assessed threats. For
the past several years, air carriers have been applying a manual
passenger screening system, in most cases conducting bag matching on
the checked baggage of passengers who were selected. At the time it was
instituted, immediate implementation was deemed necessary to counter
the then-prevailing security threat. These contingency measures are not
permanent rules; accordingly, the FAA's analysis reflects the costs of
instituting security measures beyond those required by permanent rules.
Costs for the bag matching implementation, operating, and delay
portions of the proposed rule were based on estimates by SABRE Decision
Technologies Group, South Lake, Texas (SABRE). SABRE based their costs
on interpolation of data from a live study of the operational
feasibility and cost impact of requiring 100% PPBM for part 108
aircraft operators. The proposed rule anticipates that only 5% of
checked baggage would be subject to bag matching. In addition to SABRE,
the National Center of Excellence in Aviation Operations Research (COE)
assisted in the assessment of costs for this proposed rule. The FAA
used cost data developed by SABRE as the potential maximum as the costs
of the proposed rule. Cost estimates used in this analysis were based
on SABRE's analysis of the aforementioned bag matching study. The data
from the bag matching study included a wide diversion of cost
experience by individual air carriers using procedures to accommodate
all checked baggage. Substantially different and less expensive
procedures with fewer delays and system-wide impacts may be applicable
where bag matching is done for a pre-selected group of travelers.
Descriptions of the potentially less costly implementation of the
proposed rule are discussed in the FAA's forthcoming ``Report to
Congress: Domestic Bag Match Pilot Program.''
1. Baggage Matching Costs
The proposed rule would impose an estimated cost of $2.8 billion
($2.0 billion, discounted) over the next 10 years in 1998 dollars, for
baggage matching. This cost estimate is composed of two primary cost
components: (1) Baggage Matching Startup and Operating Costs and (2)
Baggage Matching Delay Costs. The manner by which costs for each of
these two components were derived will be discussed in the following
sections.
a. Baggage Matching Startup Costs. Based on cost information
received from the SABRE Technologies Group (henceforth, referred to as
``SABRE''), baggage matching startup costs for all impacted air
carriers would amount to an estimated $217 million ($203 million,
discounted) over the next 10 years. Startup costs consist of several
components. First, there is initial training for gate agents, ramp
personnel, and skycap personnel. Air carriers would be expected to
train their airport personnel in order to ensure compliance with the
proposed rule. This training would familiarize airport terminal
personnel with the new requirements of baggage matching procedures for
5% passenger screening. At some airports, skycap personnel currently
load passenger baggage on a conveyer belt in the curbside area. Under
the proposed rule, air carriers would have to either train skycap
personnel or use trained ticket agents to handle the checked baggage of
those passengers selected by CAPS, in order to prevent this and other
potential problems. Second, additional hardware would be needed.
Hardware would primarily consist of additional boarding pass readers,
communications equipment, barcode scanners, and magnetic strip readers.
Third, equipment such as radios and carts would be needed. Fourth, some
airport facilities would be changed. The ticket counter, curbside, and
gate areas may be expanded as a means of accommodating the
implementation of baggage matching requirements. Additional staffing
would be needed, as would additional gate agents and ramp personnel to
minimize the number of lost or mishandled baggage.
SABRE obtained aggregated startup costs of $141 million (in 1997
dollars; this estimate was subsequently updated to 1998 dollars using
the GDP Implicit Price Deflator) from seven major air carriers. To
estimate startup costs for the two major air carriers that did not
report cost data, SABRE projected cost based on annual departures.
SABRE believed this procedure would take into account the size of the
air carriers' operations on startup cost. A simple average of the seven
air carriers' costs would have significantly overstated or understated
the startup costs for the two air carriers that did not report cost
data. The startup cost rate for ``majors'' was $36.24 per departure.
This estimate and all other cost estimates were updated to 1998
dollars. Moreover, this estimate was derived by dividing the startup
costs of $141 million by the number of 1997 domestic departures for
those seven major air carriers that participated in SABRE's survey.
For national and regional jet air carriers, the same startup rate
of $36.24 per departure was used to estimate their startup costs.
National and regional operators operate on a much smaller scale than
the majors do. While the
[[Page 19229]]
assumed startup rate for national and regional jet operators may be
higher than what they may actually incur, it is believed to provide a
reasonable first approximation of startup costs for this group of
operators.
For national and regional turboprop air carriers, a startup cost
estimate of $2.82 per departure is used, as estimated by SABRE, based
on an earlier report (March 1996) for 100 % PPBM for national and
regional turboprop air carriers. This estimate of $2.82 was
extrapolated by SABRE in a manner similar to that of the aforementioned
startup cost estimate of $36.24, to reflect an estimate of baggage
matching with a 5% selectee rate. Turboprop airplane operators conduct
significantly smaller scale operations than the jet air carriers. In
addition, turboprop airplane operators have fewer employees, lower wage
rates, smaller airplanes, etc.
b. Baggage Matching Operating Costs (Excluding Delays). Baggage
matching operating costs would impose an estimated $2.0 billion ($1.4
billion, discounted) over the next 10 years. This estimate is comprised
of equipment and hardware costs ($360 million), staffing costs ($1.6
billion) and training costs ($9 million). It is based on cost
information received from SABRE. Annual costs were derived by
multiplying the cost for each component times the number of projected
domestic departures for part 108 air carriers over the next 10 years
and summing to an annual total.
The cost per departure for the major air carriers has been
estimated to be $30.30. The national and regional jet air carriers
would incur an estimated cost of $21.19 per departure. The turboprop
air carriers within the ``nationals and regionals'' category would
incur an estimated operating cost of $5.88 per departure for baggage
matching. All per-departure rates are based on cost information
received from SABRE. These estimates represent costs for recurring
maintenance, staffing, and staff training for baggage matching
requirements of the proposed rule for CAPS.
c. Baggage Matching Delay Costs. Baggage matching delay costs would
impose an estimated $467 million ($323 million, discounted) over the
next 10 years (this cost is equal to 0.1% of the delay costs incurred
by the entire air carrier system on an annual basis). These costs
consist of local air carrier delays ($298 million), downstream delays
($135 million), passenger missed connections ($19 million), and
extended operating days ($16 million). These costs, which are based on
information received from SABRE, were derived by multiplying the cost
per departure for each delay component times the number of projected
annual domestic departures over the next 10 years and summed. The total
delay cost per departure for the major, national and regional jet air
carriers would be an estimated $6.85. For the national and regional
turboprop air carriers, it would be an estimated cost of $1.18 per
departure.
The baggage matching delay cost estimates are from the SABRE
Decision Technologies Group's Dependability Predictor Model (DPM). The
DPM is a proprietary simulation model that was developed for use by a
major airline. The DPM analyzes schedule performance for a typical day
by focusing on delays that could affect the scheduled operations. The
model uses historical data distributions for gate delays (ramp service,
passenger service, mechanical delays, air traffic control (ATC) gate
holds, etc.) and block time delays to simulate the movement of each
flight within the schedule.
While cost information has been received from SABRE, which was
extrapolated from a sample of air carriers, the FAA believes there is
still uncertainty associated with the estimates for startup,
operations, and delay costs for major, national and regional air
carriers. As the result of this uncertainty, the FAA solicits comments
from the aviation industry on startup, operating, and delay costs for
compliance with the baggage matching procedures portion of this
proposed rule.
2. CAPS Program Costs
Part 108 air carriers expected to install CAPS on their computer
reservation systems (CRS's) as the result of this proposed rule, would
incur an estimated compliance cost of $70 million ($51 million,
discounted) over the next 10 years, in 1998 dollars, $8 million from
the federal government. This cost estimate can be further subdivided
between those costs that air carriers would incur in their first year
(2000), at approximately $18 million ($16 million, discounted). The
cost of compliance for subsequent years (2001-2009) would amount to an
estimated $52 million ($35 million, discounted).
The individual cost components for the first year include software
design and construction, system testing, system implementation,
additional capacity for Department of Justice inquiries into how the
air carriers are complying with Department of Justice recommendations,
and check-in personnel training costs. Subsequent year cost components
include hardware and software maintenance, additional capacity for
responding to Department of Justice inquiries, and recurrent check-in
personnel training. The FAA has estimated these component costs for
each impacted air carrier for 1997. In the discussion below, these
components are expressed in terms of per-departure costs to be
consistent for all the other costs discussed in this analysis are
expressed in terms of per-departure costs. The agency has also
determined that the best way to project future costs would be to
calculate the per-departure costs. These per-departure costs are then
multiplied by total departures to calculate costs for the years covered
by this analysis.
The entire CAPS program is made up of three components. These three
components include the computer program, the individualized screens
that would be unique to each air carrier, and the data gatherer. All
air carriers could obtain the necessary licenses from the FAA to use
the computer program free of charge; however, all air carriers would
incur costs modifying both the interface between CAPS and the rest of
the system and the individualized screens for their specific needs.
To establish CAPS on their CRS's, air carriers have three viable
options. These options include joining other air carriers' CRS's,
building their own CAPS systems, and using part of the existing CAPS
and revising other portions. The first option would be the least
costly, while the middle option would be the most costly. Air carriers
that would adopt this costly option would be those whose computers
would not accept the original source code developed for CAPS or would
want more privacy due to proprietary data.
The U.S. Congress has appropriated $8.0 million to the FAA to pay
for the necessary software, hardware, and other costs needed to get the
CAPS program up and running (this does not include the $2.5 million
that the FAA had awarded to Northwest Airlines to develop CAPS). The
FAA has established an Integrated Product Team (IPT) to work with the
air carriers to determine their individual needs. The cost estimates
gathered by the IPT were used by the FAA in this analysis to help
determine first-year implementation costs for the following components:
software design, system testing, and system implementation. For this
analysis, the FAA divided the total costs among these components for
all air carriers by the total number of departures to obtain the per-
departure costs at $1.81, $0.13, and $0.10, respectively. Due to the
need to keep records for Department of Justice inquiries, each air
carrier would need to add additional computer capacity; the
[[Page 19230]]
per-departure cost for this added capacity is estimated to be $0.34. In
addition, all check-in personnel would need training; the per departure
cost for this training is estimated to be $0.33.
Each air carrier would have hardware and software maintenance costs
in the subsequent years, and the software costs would depend on which
of the aforementioned CAPS options the air carrier had chosen. The cost
per departure for hardware and software maintenance is estimated to be
$0.39. Meanwhile, the per-departure costs for the Department of Justice
inquiries and training are $0.05 and $0.33, respectively. Hence, first
year costs sum to $2.71 per departure, while subsequent year costs sum
to $0.77 per departure.
For both the CAPS and baggage matching, the proposed rule would
impose total compliance costs of $2.8 billion ($2.0 billion,
discounted), over 10 years. This estimate is composed of the following
components:
<bullet> Baggage Matching Startup Costs:
$217 million ($203 million, discounted)
<bullet> Baggage Matching Implementation and Operating Costs:
$2.0 billion ($1.4 billion, discounted)
<bullet> Baggage Matching Delay Costs:
$467 million ($323 million, discounted)
<bullet> CAPS Program Implementation and Operating Costs:
$70 million ($51 million, discounted)
The FAA expects that the total cost of compliance of $2.8 billion
may represent a potential maximum cost estimate. Estimating the
economic cost that this proposed rule would impose on airlines and
passengers was a difficult undertaking, as suggested by the wide range
of estimates that different airlines provided. As mentioned above, in
addition to SABRE, COE assisted in the assessment of costs for this
proposed rule. Because implementation of domestic baggage matching
based on a passenger screening process such as CAPS was not the subject
of any live tests, COE believes that substantial economies may be
achieved by airlines beyond the experience of a live bag matching test
that was conducted in the spring of 1997 and ``a priori'' estimates
supplied by individual airlines. COE projected that the proposed rule
would cost between $500 million (based on 7 cents per passenger
enplanement) and $2.5 billion (based on 36 cents per passenger
enplanement) over the next decade. In addition, according to COE, as
part of a follow-up to the live test conducted for passenger baggage
matching, air carriers stated that the costs they provided were
overstated by at least 33%. This assessment is based on the fact that
air carriers now have a much better idea how they would implement 100%
PPBM if they were required to do so by regulation. Based on this
information, coupled with the fact that there is some uncertainty as
the result of the interpolation technique used by SABRE and COE to
estimate costs, the FAA solicits comments from the aviation community
as to the accuracy of this assessment of costs.
B. Benefits
The primary benefits of the proposed rule would be in significantly
increased protection from terrorism for U.S. citizens and others
traveling on U.S. domestic air carrier flights. Specifically, the
proposed rule is aimed at deterring terrorism by preventing explosives
from being placed on board commercial flights in checked baggage.
Terrorism can occur within the United States. Members of foreign
state-sponsored terrorist groups and radical fundamentalist elements
from many nations are present in the United States. In addition,
Americans are joining terrorist groups. The activities of some of these
individuals and groups go beyond fund-raising to recruiting other
persons (both foreign and American) for activities that include
training with weapons and making bombs. These extremists operate in
small groups and can act without guidance or support from state
sponsors. This makes it difficult to identify them or to anticipate and
counter their activities. The following discussion outlines some of the
concrete evidence of the increasing terrorist threat within the United
States and to domestic aviation.
Investigation into the February 1993 attack on the World Trade
Center uncovered a foreign terrorist threat in the United States that
is more serious than previously known. The World Trade Center
investigation disclosed that Ramzi Yousef arrived in the United States
in September 1992 and presented himself to immigration officials as an
Iraqi dissident seeking asylum. Yousef and a group of Islamic radicals
in the United States then spent the next five months planning the
bombing of the World Trade Center building and other acts of terrorism
in the United States. Yousef returned to Pakistan on the evening of
February 26, 1993, the same day that the World Trade Center bombing
took place. Yousef traveled to the Philippines in early 1994, and by
August of the same year had conceived a plan to bomb as many as twelve
U.S. air carriers flying between East Asian cities and the United
States.
Yousef and co-conspirators Abdul Murad and Wali Khan tested the
type of explosive devices to be used in the aircraft bombings, and in
December 1994 they demonstrated the group's ability to assemble such a
device in a public place by bombing a Manila theater. Later in the same
month, the capability to get an explosive device past airport screening
procedures and detonate it aboard an aircraft also was successfully
tested when a bomb was placed by Yousef aboard the first leg of
Philippine Airlines Flight 424 from Manila to Tokyo. The device
detonated during the second leg of the flight, after Yousef had
deplaned at an intermediate stop in the Philippine City of Cebu.
Preparations for executing the plan were progressing rapidly;
however, the airliner bombing plot was discovered in January 1995 only
by chance after a fire led Philippine police to the Manila apartment
where the explosive devices were being assembled. Homemade explosives,
batteries, timers, electronic components, and a notebook full of
instructions for building bombs were discovered. Subsequent
investigation of computer files taken from the apartment revealed the
plan in which five terrorists were to have placed explosive devices
aboard United, Northwest, and Delta airline flights. In each case, a
similar technique was to be used. A terrorist would fly the first leg
of a flight out of a city in East Asia, plant the device aboard the
aircraft and then get off at an intermediate stop. The explosive device
would then destroy the aircraft as it continued on the subsequent leg
of the flight to the United States. It is likely that thousands of
passengers would have been killed if the plot had been successfully
carried out.
Yousef, Murad and Khan were arrested and convicted in the bombing
of Philippine Airlines Flight 424 and in the conspiracy to bomb U.S.
airliners. Yousef was sentenced to life imprisonment for his role in
the Manila plot, while the two other co-conspirators have been
convicted. Yousef also was convicted and sentenced to 240 years for the
World Trade Center bombing. However, there are continuing concerns
about the possibility that other conspirators remain at large. The
airliner bombing plot, as described in the files of Yousef's laptop
computer, would have had five participants. This suggests that, while
Yousef, Murad and Khan are in custody, there may be others at large
with the knowledge and skills necessary to carry out a similar plot
against civil aviation.
The fact that Ramzi Yousef was responsible for both the World Trade
Center bombing and the plot to bomb as many as twelve U.S. air carrier
aircraft
[[Page 19231]]
shows that: (1) foreign terrorists are able to operate in the United
States, and (2) foreign terrorists are capable of building and artfully
concealing improvised explosive devices that pose a serious challenge
to aviation security. This, in turn, suggests that foreign terrorists
conducting future attacks in the United States may choose civil
aviation as a target. Civil aviation's prominence as a prospective
target is clearly illustrated by the circumstances of the 1995 Yousef
conspiracy. The bombing of a federal office building in Oklahoma City
shows the potential for terrorism from domestic groups. While the
specific motivation that led to the Oklahoma City bombing would not
translate into a threat to civil aviation, the fact that domestic
elements have shown a willingness to carry out attacks resulting in
indiscriminate destruction is worrisome. At a minimum, the possibility
that a future plot hatched by domestic elements could include civil
aircraft among possible targets must be taken into consideration. Thus,
an increased threat to civil aviation exists and needs to be prevented
and/or countered from both foreign sources and potential domestic ones.
That both the international and domestic threats have increased is
undeniable. While it is extremely difficult to quantify this increase
in threat, the overall threat can be roughly estimated by recognizing
the following:
<bullet> U.S. aircraft and American passengers are good
representatives of the United States, and therefore are appealing
targets;
<bullet> Up to 12 airplanes could have been destroyed in the
actual plot described above, and thousands of passengers killed
(while the proposed rule would not have prevented the plot described
above, this plot is representative of the type and seriousness of
the threat that this proposed rule is trying to prevent);
<bullet> These plots came close to being carried out; it was
only through a fortunate discovery and tighter security after the
discovery of the plot that these incidents were thwarted;
<bullet> It is just as easy for international terrorists to
operate within the United States as domestic terrorists, as
evidenced by the World Trade Center bombing; therefore
<bullet> Based on these facts, the increased threat to domestic
aviation could be seen as equivalent to some portion of 12 Class I
Explosions on U.S. airplanes. (The FAA defines a Class I Explosion
as an incident that involves the loss of an entire aircraft and
incurs a large number of fatalities.)
In 1996, both Congress and the White House Commission on Aviation
Safety and Security recommended further specific actions to increase
aviation security. The White House Commission stated that it believes
that the threat against civil aviation is changing and growing, and
recommended that the federal government commit greater resources to
improving civil aviation security. President Clinton, in July 1996,
declared that the threat to aviation of both foreign and domestic
terrorism is a national threat. The U.S. Congress recognized this
growing threat in the Federal Aviation Reauthorization Act of 1996 by:
(1) authorizing money for the purchase of specific anti-terrorist
equipment and the hiring of extra civil aviation security personnel;
and (2) requiring the FAA to promulgate additional security-related
regulations.
The cost of a catastrophic terrorist act can be estimated in terms
of lives lost, property damage, decreased public utilization of air
transportation, etc. Terrorists acts can result in the complete
destruction of an aircraft with the loss of all on board.
In the absence of increased protection for the U.S. domestic
passenger air transportation system, it is conceivable that the system
would be targeted for future acts of terrorism. If even one such act
were successful, the traveling public would demand immediate increased
security. Providing immediate protection on an ad hoc emergency basis
would result in major inconveniences, costs, and delays to air
travelers that may substantially exceed those imposed by the planned
and measured steps contained in this proposal.
Based on the above statement, and after evaluating feasible
alternative measures, the FAA concludes that this proposed rule sets
forth the best method to provide increased security at the present
time. Notwithstanding the above, it is helpful to consider, to the
limited extent possible, the benefits of this proposal in reducing the
costs associated with terrorist acts to the threat level and other
factors. The following analysis describes alternative assumptions
regarding the number of terrorist acts prevented and potential market
disruptions averted that result in the proposed rule benefits at least
equal to the proposed rule costs. This is intended to allow the reader
to judge the likelihood of benefits of the proposed rule equaling or
exceeding its cost.
The FAA considers a Boeing 737 as representative of a typical
airplane flown domestically. It flies with an average load factor of
64.7%, which translates into 73 passengers per flight; the airplane
would also have two pilots and three flight attendants.
A terrorist catastrophic incident could also result in fatalities
on the ground. There were 11 such fatalities in the Pan Am 103
explosion and 15 fatalities in a collision of an AeroMexico airplane
with a Piper PA-28 airplane over Cerritos, California in 1986. However,
looking at the number of accidents including aircraft covered by this
proposed rule and the number of fatalities on the ground over the last
ten years, the average fatality was less than 0.5 persons per accident.
Therefore, the FAA will not assume any ground fatalities in this
analysis.
In order to provide a benchmark comparison of the expected safety
benefits of rulemaking actions with estimated costs in dollars, the FAA
currently uses a value of $2.7 million to statistically represent a
human fatality avoided. Applying this value, the total fatality loss of
a single Boeing 737 is represented by a cost of $210.6 million (78 x
$2.7 million).
Quantified undiscounted estimated costs of a single domestic Class
I Explosion on civil aviation are summarized on Table 1.
Table 1.--Costs of a Domestic Class I Explosion
[1998 Dollars]
----------------------------------------------------------------------------------------------------------------
Number Value Total cost
----------------------------------------------------------------------------------------------------------------
Fatalities...................................................... 78 $2,700,000 $210,600,000
Aircraft........................................................ 1 16,500,000 16,500,000
Property........................................................ 1 12,508,028 12,508,028
Investigation................................................... 1 28,640,637 28,640,637
Legal Fees...................................................... .............. 3,569,383 3,569,383
-----------------------------------------------
Total....................................................... .............. .............. 271,818,048
-----------------------------------------------
[[Page 19232]]
Total, discounted........................................... .............. .............. 190,908,689
----------------------------------------------------------------------------------------------------------------
Source: U.S. DOT, FAA, APO-310, March 1999.
Certainly the primary concern of the FAA is preventing loss of
life, but there are other considerations as well. Another large
economic impact is related to decreased airline travel following a
terrorist event. A study performed for the FAA by Pailen-Johnson
Associates, Inc., An Econometric Model of the Impact of Terrorism on
U.S. Air Carrier North Atlantic Operations, indicated that it takes
about 9 to 10 months for passenger traffic to return to the pre-
incident level after a single event. Such a reduction occurred
immediately following the destruction of Pan Am Flight 103 over
Lockerbie, Scotland in December 1988. In general, 1988 enplanements
were above 1987's. There was a dramatic fall-off in enplanement in the
first 3 months of 1989 immediately following the Pan Am 103 tragedy,
and it took until November 1989 for enplanements to approximate their
1987 and 1988 levels.
Trans-Atlantic enplanements increased, from 1985 to 1988, at an
annual rate of 10.7 percent. Projecting this rate to 1989 would have
yielded 1989 enplanements of 8.1 million, or 1.6 million more than Pan
Am actually experienced. This represents almost a 20 percent reduction
in expected enplanements caused by the destruction of Pan Am 103 by
terrorists.
The estimated effect of a successful terrorist act on the domestic
market has not been studied. Although there are important differences
between international and domestic travel (such as the availability of
alternative destinations and means of travel), the FAA believes that
the traffic loss associated with international terrorist acts is
representative of the potential domestic disruption.
There is a social cost associated with travel disruptions and
cancellations caused by terrorist events. The cost is composed of
several elements. First is the loss associated with passengers opting
not to fly--the value of the flight to the passenger (consumer surplus)
in the absence of increased security risk and the profit that would be
earned by the airline (producer surplus). Even if a passenger opts to
travel by air, the additional risk may reduce the associated consumer
surplus. Second, passengers who cancel plane trips would not purchase
other goods and services normally associated with the trip, such as
meals, lodging, and car rental, which would also result in losses of
related consumer and producer surplus. Finally, although spending on
air travel would decrease, pleasure and business travelers may
substitute spending on other goods and services (which produces some
value) for the foregone air trips. Economic theory suggests that the
sum of the several societal value impacts associated with canceled
flights would be a net loss. As a corollary, prevention of market
disruption (preservation of consumer and producer welfare) through
increased security created by the proposed rule is a benefit.
The FAA is not able to estimate the actual net societal cost of
travel disruptions and the corollary benefit gained by preventing the
disruptions. However, there is a basis for judging the likelihood of
attaining benefits by averting market disruption sufficient, in
combination with safety benefits, to justify the proposed rule. The
discounted cost of this proposed rule is $2.0 billion, while the
discounted benefits for each Class I Explosion averted (from Table 7)
comes to $190 million. Hence, if only 1 Class I Explosion is averted,
the present value of losses due to market disruption must at least
equal $1.8 billion ($2.0 billion less $190 million--one Class I
Explosion). If two Class I Explosions are averted, the value of the
market losses must at least equal $1.6 billion ($2.0 billion less 2
times $190 million).
The value of market loss averted is the product of the number of
foregone trips and the average market loss per trip (combination of all
impacts on consumer and producer surplus). If one uses an average
ticket price of $160 as a surrogate of the combined loss, preservation
of 11.2 million lost trips would be suffered, in combination with the
safety benefits of 1 averted Class I Explosion, for the benefits of
proposed rule to equal costs. This represents 3 percent of annual
domestic trips (the traffic loss caused by Pan Am 103 on trans-Atlantic
routes was 20 percent). Calculations can be made on the number of
averted lost trips needed if the net value loss was only 75 percent of
the ticket price or exceeded the ticket price by 25 percent. If total
market disruption cost was $130 or $200 per trip, retention of 13.8 and
9.0 million lost trips, respectively, would need to occur for the
proposed rule benefits to equal the proposed rule costs, assuming 1
Class I Explosion would be prevented. The FAA requests comments on the
potential size of market loss per trip and number of lost trips
averted.
Table 2 presents combinations of the total number of trips not
taken as a result of one to four Class I Explosions at alternative
values per lost trip that would be sufficient to generate monetized
benefits in excess of the estimated proposed rule costs.
Table 2.--Number of Trips Not Taken as a Result of One to Four Class I
Explosions Avoided
[For Benefits to Equal Costs]
------------------------------------------------------------------------
Assumed net market loss per
trip (in 1998 dollars)
Number of class I explosions avoided --------------------------------
$130 $160 $200
(million) (million) (million)
------------------------------------------------------------------------
1...................................... 13.8 11.2 9.0
2...................................... 12.2 10.0 8.0
3...................................... 10.9 8.8 7.1
4...................................... 9.4 7.6 6.1
------------------------------------------------------------------------
Source: FAA, APO-310, March 1999.
The FAA stresses that the range of trips not taken in Table 2 is
shown for illustrative purposes and does not represent an explicit
endorsement that these would be the exact number of trips that would
actually be lost. As noted above, it is important to compare, to the
limited extent possible, the cost of this proposal to some estimate of
the benefit of increased security it would provide as that level of
security relates to the threat level.
Based on the White House Commission recommendation, recent
Congressional mandates and the known reaction of Americans to any air
carrier disaster, the FAA determines that pro-active regulation is
warranted to prevent terrorist acts (such as Class I Explosions) before
they occur.
C. Analysis of Alternatives to the NPRM
The proposed rule is a ``significant regulatory action'' as defined
by Executive Order 12866 (Regulatory Planning and Review) because it
would impose costs exceeding $100 million annually. The Executive Order
requires that agencies proposing significant rules
[[Page 19233]]
provide an assessment of feasible alternatives to their respective
rulemaking actions. In addition, the Executive Order requires that an
explanation of why the proposed rule, which is significant, is
preferable to the identified potential alternatives. In the following
discussion, FAA provides an assessment of six alternatives, with
Alternative Number Five being chosen as the proposed rule:
1. The Status Quo
This alternative would maintain the status quo. Currently, the FAA
mandates manual passenger screening or baggage matching based on this
screening only in situations where the FAA has determined that a
heightened security threat exists. Manual passenger screening is
performed on a contingency basis when the FAA issues Security
Directives (SD's). Security Directives are temporary conditions, which
are considered part of the status quo. While costs are incurred to
implement manual passenger screening whenever a threat exists, they are
not considered permanent costs because they are associated with
procedures required by emergency, temporary rules. The FAA believes
that the threat to civil aviation within the United States has
increased and further rulemaking is necessary.
2. Phasing In the Mandatory Use of Explosives Detection System (EDS)
(Without Requirement for CAPS)
Alternative Two would phase in the mandatory use of EDS over a 10-
year period of time, at a rate of 10% per year. By the end of the first
year, approximately 10% of all passengers and baggage would be covered,
by the end of the second year, 20% of all passengers and baggage would
be covered, etc. Under Alternative Two, air carriers without EDS would
be required to continue performing their status quo security procedures
until they are provided with EDS equipment. Over 10 years, total EDS
costs sum to $2.1 billion ($1.4 billion, discounted).
In terms of benefits, EDS equipment offers the highest level of
security against explosives being stored in the cargo compartments of
airplanes. Explosives detection system equipment is able to examine all
baggage as it passes through on a conveyor belt. Baggage that clears on
the first leg of travel does not require re-examination with subsequent
transfers to other flights or other air carriers.
Alternative Two would, over the initial 10-year period, probably
provide, on average, less benefits than the proposal. In the first
year, only 10% of the passengers and baggage would be covered, so only
10% of the potential increase in overall security (and hence, benefits)
associated with EDS would be attained. Only during the tenth year would
there be full augmentation of EDS, and attainment of the full increase
in security (and hence, benefits) associated with EDS. Averaging these
increases over 10 years yields only 55% of the full EDS benefit. This
contrasts with the proposed rule where each year there would be the
full attainment of benefits.
The FAA believes that where it is applied, EDS would be more
effective than the proposal; however, the benefits of complete EDS
implementation would need to be roughly twice that of the proposal for
Alternative Two to be superior.
A goal of all carriers using EDS for 100% of its flights cannot be
realized immediately due, among other reasons, to the lack of
production capability. This lack of full EDS coverage would lead to a
window of vulnerability as only some flights would be covered. Under
Alternative Two, the step-by-step annual improvements in the level of
security would lead to a bifurcated security program. The public would
realize that some flights would be safer than others. Terrorists may be
able to determine which flights were cleared by EDS and act
accordingly, potentially resulting in an airplane explosion. The FAA
rejects Alternative Two on the basis that it would provide an
unacceptable level of risk higher than the proposed rule.
3. Requiring 100% PPBM of Each Carrier While Phasing In Mandatory Use
of EDS
Alternative Three would supplement the EDS required in Alternative
Two by requiring 100% PPBM for those flights until EDS becomes
available. Hence, the first year would have 10% of the passengers and
baggage covered by EDS and 90% by baggage matching, etc., until the
tenth year which would have 100% of the passengers and baggage covered
by EDS.
This alternative would combine the costs of EDS with the costs of
those flights on which full baggage matching is used. Over 10 years,
total EDS costs sum to $2.1 billion ($1.4 billion, discounted). The
costs of baggage matching portion of this alternative would be $4.6
billion ($3.7 billion, discounted), with total 10-year costs for
Alternative Three at $6.7 billion ($5.0 billion, discounted).
Alternative Three would yield the highest level of security of any
of the alternatives considered; however, this alternative could produce
major operational obstacles. Large numbers of domestic flights are
scheduled around a hub and spoke system. Under this alternative, a 100%
PPBM alternative would probably result in substantial flight delays due
to the unloading of unmatched baggage. These initial delays would
impact and delay some connecting flights. This action would result in a
daily ripple effect, which would get worse as the day wore on. These
operational burdens on air carriers would result both in fewer flights
and passengers paying more for tickets. Facility requirements for each
passenger on each flight of a combined passenger bag match/EDS system
could overload the existing system; the space and time required for
screening all checked baggage by EDS could cause severe congestion at
existing airport facilities.
The FAA has very high confidence in the effectiveness of the
proposed rule in terms of countering the current threat. It believes
that most of the current threat could be successfully countered through
the implementation of CAPS. Alternative Three would be more effective
in countering the threat, but the FAA does not believe that the
incremental increase in security provided by Alternative Three is worth
the additional cost of this alternative, which is about $4 billion more
than the proposed rule.
4. Baggage Matching on Randomly Selected Passengers While Phasing In
EDS
Like Alternatives Two and Three, Alternative Four would move
towards a security system based on EDS screening. Random selection,
rather than CAPS, would determine which passengers would be subjected
to baggage matching.
The FAA believes, for analyzing this alternative, that a 10%
screening rate would be a believable and effective random rate to
provide deterrence to terrorists. Explosives detection systems would be
phased in, such that, for the first year, 10% of the passengers and
baggage would be subject to the full use of EDS and 90% to this reduced
(10%) screening rate of baggage matching, etc. Ten-year costs for the
partial baggage matching portion of this scenario would be $1.4 billion
(net present value, $1.1 billion). With total EDS costs at $2.1 billion
($1.4 billion, discounted), total 10-year costs for this alternative
sum to $3.5 billion ($2.5 billion, discounted).
As above, the FAA believes that where it is applied, EDS would be
more effective than the proposal, so total benefits from 100% EDS
screening would be higher than the proposal;
[[Page 19234]]
however, even with the greater effectiveness of EDS, the major problem
with Alternative Four is the window of vulnerability that would still
exist. In the first year, 90% of flights would depend on a randomly
selected baggage matching alternative that would be much less effective
than CAPS. As discussed above, the FAA assumes that CAPS would be very
effective in countering the threat. Selecting 10% of the passengers at
random would, on these flights, yield benefits only 10% of those that
would be derived from the proposal. Until the tenth year, where full
EDS implementation would be expected, there would be a major shortfall
in benefits.
A goal of using EDS for 100% of flights cannot be implemented
immediately due, among other reasons, to the lack of production
capability. Even when partial EDS screening is combined with random
baggage matching, only some flights would be covered, so many flights
would remain vulnerable. Given that this alternative is more expensive
than the proposal, yet does not close the window of vulnerability, the
FAA rejects this alternative.
5. Baggage Matching on Passengers Selected by CAPS With Use of EDS,
Where Available
This is the proposed rule, which was costed out in the discussion
above.
6. Performing Baggage Matching on a Limited Number of CAPS Selectees
Alternative Six would modify the proposed rule in that the air
carriers would use CAPS to form the pool of selectees, but only subject
a random number of these selectees to baggage matching. For analysis
purposes, the FAA is assuming that 50% of the pool of selectees would
be subjected to baggage matching. This yields ten-year costs of $1.6
billion ($1.1 billion, discounted).
The proposed rule provides benefits by performing baggage matching
on 100% of selectees. Reducing this pool would reduce the protection
afforded by CAPS and baggage matching and would increase the likelihood
that someone who would have been a CAPS selectee but who was excluded
from heightened security measures under this alternative would be able
to cause an explosion on an airplane. The FAA is calculating benefits
by assuming that a 50% reduction in the pool of CAPS selectees would
bring about a nearly 50% reduction in benefits from current levels.
The major problem with this alternative is that it would offer a
lower level of security and would amount to reducing the effectiveness
of the CAPS criteria. As discussed above, the FAA assumes that CAPS
would be very effective in countering the threat. Reducing the selectee
pool by 50% at random would yield benefits equal to roughly half of
those that would be derived from the proposal. This creates a window of
vulnerability on every flight, as only some passengers' baggage would
be screened, and would not mitigate the threat as effectively as the
proposed rule. It is not prudent to establish a computerized automated
profiling system to select passengers and then ignore some of these
selectees, hoping that the deterrence value of the possibility of being
selected would equal or outweigh the benefits of performing baggage
matching. This alternative could allow a selectee whose checked baggage
was not subject to baggage matching to cause an explosion on an
airplane.
Initial Regulatory Flexibility Determination and Analysis
A. Initial Regulatory Flexibility Determination
The Regulatory Flexibility Act of 1980 (RFA) was enacted by
Congress to ensure that small entities (small business and small not-
for-profit government jurisdictions) are not unnecessarily and
disproportionately burdened by Federal regulations. The RFA, which was
amended May 1996, requires regulatory agencies to review rules that may
have ``a significant economic impact on a substantial number of small
entities.'' The Small Business Administration suggests that ``small''
represents the impacted entities with 1,500 or fewer employees. For
this proposed rule, the small entity group is considered to be part 108
scheduled operators with airplanes having 61 or more passenger seats
(Standard Industrial Classification Code 4512) and 1,500 or fewer
employees. The FAA has identified a total of 12 operators that meet
this definition.
To determine the impact of the proposed rule on small part 108
operators, the FAA has estimated the annualized cost impact on each of
those small entities potentially impacted by the proposed rule. The
proposed rule is expected to impose an estimated $122 million on the 12
small entities over the next 10 years. For purposes of this rulemaking,
one percent of the annual median revenue ($823,000, in 1998 dollars) is
considered economically significant in that it may entail either an
increase in airline ticket fares or a requirement to create operating
cost efficiencies to preserve the economic stability of impacted
airlines. Ten of the 12 part 108 small entities would incur a
substantial economic impact in the form of higher costs in excess of
$823,000, as the result of the proposed rule. Furthermore, the cost
burden is not strictly proportionate to the size of the airline as
inferred by the number of employees. For these reasons, a regulatory
flexibility analysis is presented below.
B. Initial Regulatory Flexibility Analysis
Under Section 603(b) of the RFA (amended May 1996), each initial
regulatory flexibility analysis is required to address these points:
(1) reasons why the FAA is considering the proposed rule, (2) the
objectives and legal basis for the proposed rule, (3) the kind and
number of small entities to which the proposed rule would apply, (4)
the projected reporting, recordkeeping, and other compliance
requirements of the proposed rule, and (5) all Federal rules that may
duplicate, overlap, or conflict with the proposed rule.
Reasons why the FAA is considering the proposed rule: Over the past
several years, the FAA has recognized that the threat against civil
aviation is changing and growing. See either the discussion under
``Background'' above, or the background section of the Regulatory
Impact Analysis (RIA) for a more detailed discussion of this threat.
Terrorist and criminal activities within the United States have forced
the FAA and other federal agencies to reevaluate the domestic threat
against civil aviation. The proposed rule is intended to counter this
increased threat to U.S. civil aviation security.
The objectives and legal basis for the proposed rule: The objective
of the proposed rule is to significantly increase protection to
Americans and others traveling on U.S. domestic air carrier flights
from acts of terrorism. Specifically, the proposed rule is aimed at
preventing explosives from being placed on board commercial flights in
checked baggage.
The legal basis for the proposed rule is found in 49 U.S.C. 44901
et seq. As a matter of policy, the FAA must consider, among other
concerns, maintaining and enhancing safety and security in air commerce
as its highest priorities (49 U.S.C. 40101(d)).
The kind and number of small entities to which the proposed rule
would apply: The proposed rule applies to 32 operators of part 108
aircraft, of which 12 are small scheduled operators (with 1,500 or
fewer employees) that use aircraft with more than 60 passenger seats
(SIC Code 4512). A brief financial
[[Page 19235]]
profile of these small entities is provided in the full Regulatory
Impact Analysis (which includes net income, assets, liabilities, and
financial strength ratios) by category: Nationals, Large Regionals, and
Medium Regionals.
----------------------------------------------------------------------------------------------------------------
Total No. of No. of small
Category Annual revenues by category entities carriers
impacted impacted
----------------------------------------------------------------------------------------------------------------
Majors..................................... More than $ 1.0b................... 9 0
Nationals.................................. $100.0m-$ 1.0b..................... 14 3
Large
Regionals.................................. $ 20.0m-$99.9m..................... 6 6
Medium
Regionals.................................. $ 0.0m-$19.9m...................... 3 3
-------------------------------
Total.................................. ................................... 32 12
----------------------------------------------------------------------------------------------------------------
The projected reporting, recordkeeping, and other compliance
requirements of the proposed rule: As required by the Paperwork
Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has submitted a copy
of these proposed sections to the Office of Management and Budget (OMB)
for its review.
All air carriers using either CAPS, 100% PPBM screening or checked
baggage screening via FAA-certified EDS system, would need to provide
compliance with the approved security program. The FAA estimates this
compliance effort would take place on a one-time basis and impose an
additional 24 hours of clerical labor for each of the small entities
during the first year of compliance (2000 only). However, the
employment of CAPS as a security procedure for screening passengers,
requires air carriers to make available, where appropriate, certain
information that the CAPS system has been programmed to generate to
facilitate DOJ and OST reviews to ensure that selection is not
impermissibly being based on race, color, gender, national or ethnic
origin or religion. To comply with the recordkeeping requirements for
DOJ inquiries, each small part 108 aircraft operator employing CAPS
will have an estimated annual recordkeeping burden of 100 hours of
clerical labor per year for a period of 10 years (based on having
compliance information available for the DOJ inquiries, and records for
personnel requiring CAPS training). Therefore, the additional
recordkeeping burden, which would apply to each of the small entities,
imposed by the proposed rule would be 124 hours in 2000 and 100 hours
for each year during 2001--2009. The cost for this time would be $2,600
or an average of $218 per respondent for 2000. For the subsequent years
(2001-2009), the additional cost for this time for small entities would
be $2,100 or $176 per air carrier per year.
There are additional annual costs resulting from the collection of
information. The first year (2000 only) estimated cost for the small
entity respondents is estimated to be $523,200 or an average of $43,600
per respondent. For years 2000--2009, the additional recordkeeping
costs for all of the small entities would be $96,500 or $8,000 per air
carrier per year.
All federal rules that may duplicate, overlap, or conflict with the
proposed rule: The FAA is unaware of any federal rules that either
duplicate, overlap, or conflict with the proposed rule.
Other Considerations
Description of lower impact alternatives: A discussion of those
alternatives that would impose less costs on the small entities subject
to this proposed rule is provided below. In addition to the proposed
rule and status quo, the analysis of alternatives reviewed three
alternatives that had a range of compliance costs between $10 million
and $122 million in a 10-year period.
Affordability analysis: For the purpose of this RIA, the degree to
which small entities can ``afford'' the cost of compliance is
predicated on the availability of financial resources. Initial
implementation costs may be obtained from either existing company
assets such as cash, by borrowing, or through the provision of
additional equity capital. Continuing annual costs of compliance may be
accommodated either by accepting reduced profits, by raising ticket
prices, or by finding other offsetting costs.
In this analysis, the assessment of the availability of financial
resources is based on the ability of each of the small entities to meet
their short-term obligations. According to financial literature, a
company's short-term financial strength is substantially influenced,
among other things, by its working capital position and ability to pay
short-term liabilities. Net working capital is the amount by which
current assets exceed current liabilities. It represents the margin of
short-term debt paying ability over existing short-term debt.
In addition to the amount of net working capital, two analytical
indexes of current position are often computed: (1) current ratio and
(2) quick ratio. The current ratio (current assets divided current
liabilities) helps put the amount of net working capital into
perspective by showing the relationship between current resources and
short term debt. And the quick ratio (sometimes called the acid test
ratio) focuses on immediate liquidity (cash, marketable securities,
accounts receivable, etc., divided by current liabilities). A decline
in net working capital, the current and quick ratios over a period of
years (say, 3 years, 4 years, etc.) may indicate that a company is
losing financial solvency. Negative net working capital is a clear
indication of financial difficulty. If a company is experiencing such
financial difficulty, it is less likely to be able to afford additional
costs.
The following conclusions are based on the subject financial
information:
<bullet> Based on current liquidity, at least three small
entities would probably be able to afford the cost of compliance
associated with this proposed rule. These entities have experienced
increases in their net working capital as well as their current and
quick ratios over the past three or four years, as shown in Table
11B. They are also generally profitable and may, therefore, have
financial resources available to meet the requirements of this
proposed rule.
<bullet> For one currently profitable small entity, its ability
to afford the cost of compliance is less certain. This uncertainty
stems from the fact that there is no financial performance history
for the small entity from 1994 to 1996 because it has only been
operating as a large passenger air carrier since second quarter of
1997. In 1997, this small entity had a net working capital in excess
of $40 million and its current and quick ratios are at least 1.8,
respectively. While this information is very positive, it does not
necessarily serve as an indicator of future performance, especially
in light of the proposed rule.
[[Page 19236]]
<bullet> For another air carrier, there is greater uncertainty
than that for the aforementioned air carrier. Uncertainty for this
entity is due to the fact that it has no financial performance
history from 1994 to 1997. This lack of financial information is due
to the fact that this air carrier did not receive its effective
operating authority until mid 1997. Its ability to comply with the
proposed rule and remain in business is unknown due to the lack of
financial information on its performance history.
<bullet> The current liquidity of the remaining seven small
entities will require action to finance the expected cost of
compliance imposed by this NPRM. Over the past two or three years,
each of these small entities has had negative net working capital.
In addition, their respective current and quick ratios have
generally been on a decline. They have frequently experienced
financial losses.
Relative Cost Impact
<bullet> The other alternative of assessing affordability,
annualized cost of compliance relative to the total operating
revenues, for each of the 12 small entities impacted by this NPRM
shows relatively small impacts for most of the small entities. The
annualized cost of compliance relative to total operating revenues
would be between 0.2 percent and 7.2 percent; in most cases, the
impact would be less than 1.0 percent.
<bullet> For seven of the air carriers the ratio of annualized
proposed rule costs to revenues would be less than 1.0 percent, on
average, for the three-year period 1995 through 1997. For these air
carriers, there appears to be a prospect of absorbing the cost of
the proposed rule through some combination of fare increases and
cost efficiencies. Even though the ratio of costs to revenues exceed
1.0 percent, on average, for the seven other air carriers, there is
a prospect that two of these air carriers may have sufficient
working capital to incur initial cost increases.
Disproportionality analysis: The FAA does not believe any of the 12
small entities would be disadvantaged relative to large air carriers,
due solely to disproportionate cost impacts. All of the air carriers
operating airplanes with 61 or more seats have to comply with the
proposed rule for CAPS.
Many small air carriers are expecting to incur relatively smaller
costs proportionate to the size of their operations because most of
them have code-share arrangements with large air carriers within the
majors category. These airlines would probably be able to employ the
CAPS systems of their code-sharing partners and thereby avoid system
development costs. Thus, because of code-share arrangements with larger
air carriers, at least 8 of these 12 small air carriers may incur costs
lower than they otherwise would. In the operating cost of compliance
section of this RIA for passenger baggage matching, major jet air
carriers are expected to incur an estimated departure cost of $30,
national and regional jet air carriers estimated departure cost of
$20.98. Some of the smallest air carriers that fall within the national
and regional turboprop category would incur a departure cost of $5.82.
Hence, on a per operation basis, lower operating costs are anticipated
for carriers which operate smaller aircraft. In general, small entities
are more likely to operate small aircraft than large aircraft.
Competitiveness analysis: The proposed rule, while it may impose
financial burdens on small entities (see affordability and business
closure analyses), is not anticipated to significantly change the
competitiveness of small entity airlines relative to larger carriers on
their domestic routes.
As discussed in the disproportionality analysis, the proposed rule
is not expected to impose a greater relative financial burden on small
compared to large airlines. Furthermore, small entities impacted by
this proposed rule are more likely to either face no competition on
individual route segments or compete among themselves rather than with
large airlines. Medium and large regional airlines (annual revenues
less than $100 million) do not compete directly with major carriers
(annual revenues exceeding $1 billion). Instead, at least two of the
impacted small entities are regional carriers code-share with major
airlines--UFS Inc. with United and Alaska Airlines with US Airways and
Northwest. Code-sharing is a device whereby regional carriers feed
traffic to majors rather than compete for traffic. Thus, for nine of
the small entities, which are classified as medium or large regionals,
to the extent there is competition on routes, competition is generally
limited to carriers within the same revenue categories. Three of the
impacted small entities are classified as nationals (annual revenues
between $100 million and $1 billion). Air Wisconsin, one of the small
entities classified as a national is also affiliated with United
Airlines--a major. Because of this affiliation, it seems unlikely that
the cost impact of the proposed rule per se would significantly change
the relative competitiveness of Air Wisconsin. The remaining two small
entity carriers classified as nationals do compete both with major
airlines, with other nationals, and some smaller revenue carriers
(namely, large regionals). While the financial impact on these small
entities may not be proportionally greater than that imposed on the
majors, the nationals may have greater difficulty in recovering the
costs of compliance with the proposed rule through ticket price
increases. This is because they are engaged in competition with the
majors for price sensitive travelers. Lower ticket prices are vital to
maintaining a competitive edge. There is also another competition
factor important for nationals--the cost of compliance would probably
be less for carriers if they link to an existing computer reservation
system (CRS) which has been modified for CAPS rather than building a
new stand alone CAPS system. Thus, the proposed rule may tend to
increase national carrier reliance on CRS systems controlled by major
airlines. Again, this may exacerbate the competitive advantage of
majors vis a vis national carriers because the terms and cost of CRS
use are determined by the majors.
Business closure analysis: The FAA is unable to determine with
certainty the extent to which those small entities that would be
significantly impacted by the proposed rule for CAPS would have to
close their operations. However, the profitability information (net
income gains and losses) and the affordability analysis can be a factor
in business closures.
In determining whether or not any of the 12 small entities would
close business as the result of compliance with this proposed rule, one
question must be answered: ``Would the cost of compliance be so great
as to impair an entity's ability to remain in business?'' A number of
these small entities are already in serious financial difficulty. For
example, one small entity has already filed for bankruptcy under
chapter 11. To what extent the proposed rule makes the difference in an
entity remaining in business is difficult to answer. The FAA believes
that if the potential cost of compliance materializes as expected,
several small operators could go out business due at least in part to
the proposed rule.
Alternatives Considered
As part of section 603(c) of the RFA, the following is an analysis
of pros and cons of the alternatives to the proposed rule:
1. Status Quo
Under this alternative, the practice of maintaining the current
policy for security of checked baggage on domestic flights would
continue. Currently, the FAA mandates manual passenger screening or
baggage matching only in situations where the FAA has determined that a
heightened threat exists. Continuing with this policy would be the
least costly course of action but less safe. The FAA believes that the
threat to civil aviation within the United States has increased and
further rulemaking is necessary. Thus,
[[Page 19237]]
this alternative is not considered to be acceptable because it permits
continuation of an unacceptable level of risk to U.S. airline
passengers. Conclusion: Under this alternative, there is a likelihood
of one or more terrorist acts resulting in Class I Explosions involving
large commercial airplanes that operate within the United States
(discussed previously in the benefits portion of this Regulatory
Evaluation Summary).
2. Current Proposal Would Apply to Small Entities Only When a Specific
Threat Exists (Standby CAPS Program)
Under this alternative, all small entities (part 108 aircraft
operators) would be required to implement requirements identical to
those of the proposed rule only when the Assistant Administrator for
Civil Aviation Security notified the certificate holder in writing that
a security threat existed with respect to a particular operation. Under
the proposed rule, all small entity operations with 61 or more seats
would be required to implement CAPS for selectees for 5% of all
passengers (originating only) and either 100% PPBM or EDS (where
available). Under this alternative, however, small entity operators
with airplanes having 61 or more passenger seats and 1,500 or fewer
employees would only be required to have a ``standby security
provision'' to implement CAPS and baggage matching for selectees.
This alternative may reduce the potential cost impact to the small
entities. For example, such airlines might incur the initial
implementation cost estimated for the proposed rule but avoid annual
operating costs; however, the proposed rule is based upon the premise
that a terrorist or criminal is not likely to ignore a larger aircraft
(determined by FAA to be those with seating configurations of 61 or
greater seats) merely because it is operated by a small entity.
Accordingly, this alternative is not considered feasible because it
is unlikely to counter the existing terrorist threat. The potential
cost of compliance associated with this alternative is estimated to be
$10 million ($9 million, discounted) over 10 years, 1998 dollars, for
all 12 small entities potentially impacted by this proposed rule. This
cost estimate assumes that potentially impacted small entities would
only incur startup costs for 1998, to be prepared in the event the
Assistant Administrator for Civil Aviation Security requests that they
implement and operate a CAPS program identical to that of the proposed
rule. Further, this analysis assumes that air carriers could respond
immediately to a CAPS program request, using existing personnel in the
short run. Conclusion: This alternative would impose the smallest cost
of compliance on part 108 small entities, and it would not impose a
significant economic impact (less than one percent of the median annual
revenues of the small entities or $823,000) on a substantial number of
such small entities. This alternative would provide minimal improvement
in protection against terrorism because it would be implemented only
after an airline was known to be a target. This alternative is rejected
on the basis that it would permit an unacceptable level of risk to
continue and would jeopardize FAA's intent to address current security
concerns related to U.S. civil aviation.
3. Small Entities Do Nothing When Receiving Passengers From a Large
Entity Air Carrier That Has Applied Proposed Rule
The proposed rule could be revised to require small entities
(having operations using aircraft of 61 or greater seats) to apply the
proposed rule only for originating passengers. For this alternative,
when a passenger transfers from a large entity to a small entity (on
which the flight is to the passenger's final destination), that small
entity would not be required to perform additional security measures.
The small entity would still be required to implement the proposed rule
for originating passengers (including those transferring to a large
entity). The checked baggage of some passengers previously identified
as posing a threat, would be allowed to continue on the small entity if
they had been subjected to heightened security measures by a major air
carrier. The potential cost of compliance associated with this
alternative is estimated to be $61 million ($43 million, discounted)
over 10 years, 1998 dollars, for all 12 small entities potentially
impacted by this proposed rule. This cost estimate was derived on the
premise that the proposed rule would only apply to those passengers
that start their trips on flights provided by the small entities. Since
at least half of the passengers carried by small entities are received
from larger air carriers, the cost of this alternative would be half of
that cost imposed by the proposed rule. Conclusion: This alternative
would impose the third highest cost of compliance impact on part 108
small entities. It would impose a significant economic impact on 6 of
12 small entities. This alternative would achieve only 50% of the
potential safety of the proposed rule. This alternative is rejected on
the basis that it would offer an unacceptably high level of threat to
U.S. civil aviation security. While the potential safety level of this
alternative is higher than that of Alternative Two, it is significantly
lower than that of the proposed rule.
4. Small Entities Apply Proposed Rule on a Smaller Scale
The proposed rule could be revised to allow small entities to apply
baggage matching for a smaller number of selectees. Under this
alternative, the rate for selectees would be 1% (as opposed to 5% for
the proposed rule). The cost savings to small entities would depend on
the magnitude of the reduction in the number of selectees; however,
this would involve reducing the number of selectees arbitrarily and not
based on a prudent rationale. Under this alternative, 80% of the
checked baggage of passengers who would have been identified as CAPS
selectees under the proposed rule would be allowed to go through the
system without undergoing additional security measures. Thus, under
this alternative a high level of risk would still remain that would be
mitigated by the proposed rule. The potential cost of compliance
associated with this alternative is estimated to be $99 million ($71
million, discounted) over 10 years, 1998 dollars, for all 12 small
entities potentially impacted by this proposed rule. This cost estimate
is based on the premise that small entities would primarily experience
a reduction in delay costs of about 80% of that to be incurred under
the proposed rule. The 1% selectee rate of this alternative represents
a reduction of 80% when compared to the proposed rule's selectee rate
of 5%. With 80% fewer passengers as potential selectees, problems with
reconciliation of checked baggage would be significantly reduced. This
impact is assumed to be linear, for lack of more accurate information.
According to technical personnel with SABRE, small changes in the
selectee rate (between 1% and 20%, for example) would only have a
linear affect on delay costs. That is, a 10% selectee rate would have
twice the delay costs than a 5% selectee rate, etc. There may also be
reductions in startup and operating costs, though to what extent is
unknown. This alternative would only generate potential security
benefits of about 20% (\1/5\ = 20%) of that of the proposed rule.
Conclusion: This alternative would impose a lower cost of compliance on
part 108 small entities than the proposed rule; however, this
alternative (when compared to the proposed rule) would provide a less
secure flight environment to small part
[[Page 19238]]
108 operators and passengers. It would also impose a significant
economic impact on a substantial number of such small entities (more
than 1% of the median annual revenues of the small entities, or
$823,000). This alternative is rejected on the basis that it would not
sufficiently reduce the risk of explosions due to terrorism.
5. The CAPS NPRM (Preferred)
This alternative represents the proposed rule for CAPS. Under this
alternative, small entities (in addition to any other part 108 aircraft
operators with airplanes having 61 or more seats) would be required to
implement CAPS (estimated at selectee rate of 5% of all passengers
(originating only) whose checked baggage would be subjected to
additional security measures), or either conduct 100% PPBM or screen
checked baggage by EDS (where available). The cost of compliance
expected to be incurred by the 12 small entities subject to the
requirements of the proposed rule is estimated to be $122 million ($85
million, discounted) over the next 10 years.
This alternative is preferred to the aforementioned alternatives
because it would impose costs and generate benefits in a manner that
would create the best balance between the cost of doing business for
all affected part 108 operators and enhanced aviation security (in the
form of threat reduction) for the traveling public (including
operators).
International Trade Impact Statement
This proposed rule would not present a significant impediment to
either U.S. firms doing business aboard, or foreign firms doing
business in the United States. The proposed rule would only apply to
and impact those part 108 scheduled air carriers (with 61 or more
passenger seats) that conduct operations in the United States. Foreign
air carriers do not compete with U.S. domestic air carriers in
providing air transportation within the United States. Air carriers
that conduct operations outside of the United States are required to
conduct 100% PPBM, which is a more stringent requirement than contained
in this proposal.
Initial Unfunded Mandates Assessment and Analysis
A. Applicability of the Unfunded Mandates Act
Title II of the Unfunded Mandates Reform Act of 1995 (the Act),
enacted as Pub. L. 104-4 on March 22, 1995, requires each Federal
agency, to the extent permitted by law, to prepare a written assessment
of the effects of any Federal mandate in a proposed or final agency
rule that may result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $100
million or more (adjusted annually for inflation) in any one year.
Section 204(a) of the Act, 2 U.S.C. 1534(a), requires the Federal
agency to develop an effective process to permit timely input by
elected officers (or their designees) of State, local, and tribal
governments on a proposed significant intergovernmental mandate. A
``significant intergovernmental mandate'' under the Act is any
provision in a Federal agency regulation that would impose an
enforceable duty upon state, local, and tribal governments, in the
aggregate, of $100 million (adjusted annually for inflation) in any one
year. Section 203 of the Act, 2 U.S.C. 1533, which supplements section
204(a), provides that before establishing any regulatory requirements
that might significantly or uniquely affect small governments, the
agency shall have developed a plan that, among other things, provides
for notice to potentially affected small governments, if any, and for a
meaningful and timely opportunity to provide input in the development
of regulatory proposals or rules.
Since this proposed rule contains a private sector mandate with a
potential cost impact of more than $100 million annually, the
requirements of Title II of the Unfunded Mandates Reform Act of 1995 do
apply. For this reason, an assessment of the Unfunded Mandates Act on
the impacted private sector is discussed below.
B. Unfunded Mandates Act Impact Assessment
To assess the potential impact of the Unfunded Mandates Reform Act
(Act) of 1995 from this proposed rule, the Act identifies six
components that must be addressed in the assessment of this proposed
rule. Each of those components is discussed below.
1. Provision of Federal Law Under Which the Proposed Rule is Being
Promulgated
The legal basis for the proposed rule is found in 49 U.S.C. 44901
et seq. As a matter of policy, the FAA must consider, among other
concerns, maintaining and enhancing safety and security in air commerce
as its highest priorities (49 U.S.C. 40101(d)).
2. Assessment of the Anticipated Costs and Benefits of the Federal
Mandate
a. Estimate of Costs--The proposed rule would impose an estimated
cost of $2.8 billion ($2.0 billion, discounted) over 10 years. This
cost estimate is composed of three components: (1) checked baggage
matching costs ($2.2 billion; $1.6 billion, discounted), (2) checked
baggage matching flight delay costs ($473 million; $326 million,
discounted), and (3) CAPS program costs ($70 million; $51 million,
discounted). During the first year of the proposed rule (2000), which
is also the most costly, part 108 air carriers are expected to incur
costs of approximately $456 million ($426, discounted). This estimate
includes fixed and recurring cost components.
b. Estimate of Benefits--The primary benefit of the proposed rule
would be significantly increased protection to Americans and others
traveling on U.S. domestic air carrier flights from the increasing
threat of acts of terrorism. Specifically, the proposed rule is aimed
at preventing explosives from being placed on board commercial flights
in checked baggage. In order for security benefits to offset compliance
costs, a terrorist act (such as a Class I Explosion) resulting in 380
aviation fatalities (including other types of casualty losses such as
aircraft replacement, market loss, etc.) would have to be avoided over
the 10 years.
c. Estimates of Future Costs of Compliance of the Federal Mandate--
For the 32 aircraft operators that would potentially be impacted by the
proposed rule, the total annual costs in each of the next 10 years
would be greater than $100 million. The total cost of the proposed rule
for the 10-year period (in 1998 dollars) would be approximately $2.8
billion ($2.0 billion, discounted) and the annualized present value of
the costs of compliance would be approximately $234 million per year. A
more detailed discussion of costs is shown in the analysis of costs
section of this regulatory impact analysis summary.
d. Estimates of Disproportionate Budgetary Effects of the Federal
Mandate--The 32 aircraft operators that would be impacted by the
proposed rule are widely dispersed across the United States, as evident
by their respective hub locations. For example, Delta Airlines has its
main hub in Atlanta, GA; United Airlines has its main hub in Chicago,
IL; American and Southwest Airlines have their main hubs in Dallas, TX.
Smaller air carriers (namely regionals) also have their main hubs
dispersed similarly to the majors and nationals since they primarily
carry their passengers into small hub airports. It is for these reasons
that the proposed rule would not impose any disproportionate budgetary
effects on
[[Page 19239]]
any particular region of the country. The proposed rule would, however,
impose costs on a particular segment of the private sector as noted
previously in the estimate of costs section of this Unfunded Mandate
Act Analysis.
e. Estimates of the Effect of the Federal Mandate on the National
Economy--As the result of the proposed rule, the impacted part 108 air
carriers are expected to increase staffing and training of airport
terminal personnel. There is insufficient information to be able to
estimate the multiplier effect the additional jobs spurred by this
proposed rule would have on the local economy in the form of a lower
unemployment rate, added tax revenues, and increased sales for consumer
goods on local communities and the national economy. The FAA is
reasonably certain that the creation of additional jobs by the proposed
rule would have a positive impact.
f. Discussion of the Least Burdensome Regulatory Alternative--The
FAA has identified four alternatives to the proposed rule in addition
to maintaining the status quo: (1) require mandatory EDS (phased in)
without CAPS; (2) require 100% PPBM during phase-in of EDS; (3) require
random bag matching during EDS phase-in; or (4) require bag matching on
only some CAPS selectees. Section V of the full Regulatory Impact
Analysis (RIA) (contained in the docket) describes the four
alternatives to the proposed rule as well as the costs to implement
them. The FAA contends that using CAPS to identify those passengers who
possibly are a threat to the security of a flight and requiring
passenger baggage matching or screening by EDS, where EDS is available,
is the most practical and cost-beneficial alternative currently
available to increase the level of security on domestic flights. A more
detailed discussion of alternatives is shown in the analysis of
alternative section of the RIA.
C. Conclusion
The FAA has determined that the cost of compliance of the proposed
rule would be greater than $100 million in each of the 10 years, but
the economic impact on State, local and tribal governments would not
exceed the $100 million threshold. The proposed rule would impose a
Federal mandate of greater than $100 million per year on the private
sector. Of all of the alternatives examined in this assessment of the
Act and the analysis of alternatives section of the RIA, the proposed
rule provides the largest net benefit.
Federalism Implications
The regulation proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
List of Subjects in 14 CFR Part 108
Air carriers, Aircraft, Airmen, Airports, Arms and munitions,
Explosives, Law enforcement officers, Reporting and recordkeeping
requirements, Security measures, X-rays.
The Proposed Amendment
In consideration of the foregoing, the Federal Aviation
Administration proposes to amend part 108 of Title 14, Code of Federal
Regulations (14 CFR part 108) as follows:
PART 108--AIRCRAFT OPERATOR SECURITY
1. The authority citation for part 108 continues to read as
follows:
Authority: 49 U.S.C. 106(g), 5103, 40113, 40119, 44701-44702,
44705, 44901-44905, 44907, 44913-44914, 44932, 44935-44936, 46105.
2. Amend Sec. 108.5 by revising paragraph (a) to read as follows:
Sec. 108.5 Security program: Adoption and implementation.
(a) Each certificate holder shall adopt and carry out a security
program that meets the requirements of Sec. 108.7 of this part for each
of the following scheduled or public charter passenger operations:
(1) Each operation with an airplane having a passenger seating
configuration of more than 60 seats.
(2) Each operation with an airplane having a passenger seating
configuration of 60 or fewer seats that provides deplaned passengers
access, that is not otherwise controlled by a certificate holder using
an approved security program or a foreign air carrier using a security
program required by Sec. 129.25 of this chapter, to a sterile area,
except that where the certificate holder elects to not carry out the
provisions of Sec. 108.12 of this part, that part of the program
effecting compliance with the requirements listed in Sec. 108.7(b)(9)
of this part need only be implemented when the Associate Administrator
for Civil Aviation Security, or a designee, notifies the certificate
holder in writing that a security threat exists with respect to the
operation.
(3) Each operation with an airplane having a passenger seating
configuration of 60 or fewer seats where the certificate holder elects
to carry out the provisions of Sec. 108.12 of this part, except that
where the operation does not provide deplaned passengers access to a
sterile area, the requirements of Sec. 108.7(b) (1) and (4) of this
part need only be implemented when the Associate Administrator for
Civil Aviation Security, or a designee, notifies the certificate holder
in writing that a security threat exists with respect to the operation.
(4) Each operation with an airplane having a passenger seating
configuration of more than 30 but less than 61 seats, that is not
subject to paragraph (a)(2) of this section, except that those parts of
the program effecting compliance with the requirements of Sec. 108.7(b)
(1), (2), (4) and (9) of this part need only be implemented when the
Assistant Administrator for Civil Aviation Security notifies the
certificate holder in writing that a security threat exists with
respect to the operation.
* * * * *
3. Amend Sec. 108.7 by adding paragraph (b)(9) to read as follows:
Sec. 108.7 Security program: Form, content, and availability.
* * * * *
(b) * * *
(9) The procedures used to perform the checked baggage security
functions specified in Sec. 108.12 of this part for scheduled passenger
operations.
* * * * *
4. Add Sec. 108.12 to read as follows:
Sec. 108.12 Security of checked baggage for operations within the
United States.
(a) Each air carrier required to adopt and carry out a security
program in accordance with Sec. 108.5 of this part shall apply the
checked baggage security requirements of this section in accordance
with its security program for scheduled passenger operations within the
United States. For each operation the air carrier shall--
(1) For each originating passenger checking baggage, use a
computer-assisted passenger screening (CAPS) system, approved by the
Administrator, capable of selecting passengers based on specific
criteria and at random; or
(2) Determine that the passenger associated with each originating
checked bag is aboard the flight or that each originating bag not
matched to a passenger aboard the flight has been screened by an
explosives detection system (EDS).
[[Page 19240]]
(b) For each operation subject to paragraph (a) of this section,
the air carrier may not transport the baggage of a non-originating
passenger unless--
(1) The passenger is aboard the flight;
(2) The passenger associated with the baggage was screened by a
CAPS system approved by the Administrator prior to an earlier flight
leg and information is available to the air carrier that the passenger
was not selected;
(3) Information is available to the air carrier that the baggage
was screened by an EDS prior to an earlier flight leg;
(4) The baggage is screened by an EDS prior to the current flight;
or
(5) The passenger is screened for the current flight as an
originating passenger in accordance with paragraph (a) (1) of this
section.
(c) The checked baggage of a passenger selected by the CAPS system
shall not be transported aboard the flight unless--
(1) The baggage is screened by an EDS where an EDS is available; or
(2) Where an EDS is not available, the passenger associated with
the baggage is aboard the flight.
(d) An EDS is considered to be available to an air carrier for
screening a checked bag when it is--
(1) Under the operational control of the air carrier;
(2) Functioning properly;
(3) Located proximate to where the baggage is tendered by the
passenger or along the route the baggage normally travels during the
process of being loaded onto the aircraft;
(4) Staffed by appropriately trained personnel; and
(5) Not in use to screen other identified baggage such that a
significant delay in a flight might result from having to wait to use
the EDS to screen the bag.
(e) Each air carrier shall establish procedures for implementing
security measures for checked baggage under this section that--
(1) Ensures nondiscriminatory application; and
(2) Minimizes the overt identification of passengers selected for
additional security procedures.
(f) Each person used by an air carrier to implement its CAPS system
whose job function will be likely to involve interactions with
passengers shall be trained on the CAPS system. The training shall
include--
(1) An overview of the purpose of screening, including an
explanation that selection does not imply that a passenger is suspected
of any illegal activity;
(2) A general description of the CAPS system and how it is designed
to select passengers on a nondiscriminatory basis;
(3) An advisory that the CAPS system selects some passengers at
random;
(4) An advisory that the CAPS system is not connected to any law
enforcement or intelligence data base; and
(5) Instruction on treating passengers selected by the CAPS system
in a respectful and non-stigmatizing manner.
(g) An air carrier may not modify the selection criteria of the
CAPS system without the written approval of the Administrator. Nor may
an air carrier apply any supplemental system of passenger screening to
select passengers for additional security measures without the approval
of the Administrator.
(h) (1) Each air carrier shall make available to the Administrator
the information specified in its security program on the general
operation of its CAPS system.
(2) Each air carrier shall maintain, for at least 24 hours, but not
longer than 72 hours, after flight departure, information linking a
passenger's name or other identifying data to whether the passenger was
selected by the CAPS system.
(3) Each air carrier shall provide the Administrator with CAPS
system data for any specific flight, including selectee status of
individuals on the flight, when requested as part of--
(i) An evaluation of the CAPS system to determine possible
discriminatory impacts;
(ii) An accident investigation;
(iii) A security incident investigation; or
(iv) Security compliance oversight.
(i) An air carrier may apply alternate procedures that are
established in its security program for screening checked bags to
address special situations. These situations could include--
(1) Baggage acceptance at off-airport locations;
(2) The transportation of bags separated from a passenger for
reasons outside the control of the passenger, e.g., lost bags;
(3) CAPS system failure;
(4) Extraordinary operational circumstances;
(5) The use of technologies or equipment other than an EDS to
screen checked baggage; and
(6) Any other situation specified by the Associate Administrator
for Civil Aviation Security in the air carrier's security program.
Issued in Washington, DC, on April 13, 1999.
Anthony Fainberg,
Director, Office of Civil Aviation Security Policy and Planning.
[FR Doc. 99-9635 Filed 4-14-99; 10:07 am]
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